Posts Tagged "rent"

Retirement’s a Struggle? Get a Boommate!

Soaring apartment rents and widowed or divorced baby boomers with spare bedrooms and inadequate retirement income – these two trends have conspired to drive up the number of boomers seeking roommates.

New listings being posted by homeowners between January and June on Silvernest, a website where boomers can search for potential roommates, doubled to 2,331 compared with the first six months of 2021, said Riley Gibson, president of Silvernest. Women account for two-thirds of the listings.

The end of the crisis phase of the pandemic and the availability of protective vaccines may have something to do with the recent surge in people being willing to share housing. And with rents up 14 percent in a year, renters – whether boomers or young adults – are looking for affordable options. “We often see [young] people are looking for an exchange for less rent – help around the house,” Riley said.

Millions of retirees still live alone and aren’t willing to let a roommate invade their space. Yet Jennifer Molinsky at Harvard’s Joint Center for Housing Studies estimates that more than 1 million older Americans currently live with non-family members.

Finding a “boommate” has multiple benefits. In this PBS video, what motivated Becky Miller, a retired receptionist, to find a roommate was the need to defray the cost of maintaining her home. But by renting to a fellow boomer, Debra Mears, Miller found more than just financial relief.

By sharing her home, she also found companionship. …Learn More

Inflation at the grocery store

Inflation Takes a Toll on Workers

The headline on a January blog asked, “How Long Can Wages Outrun Inflation?” Now we have our answer.

Inflation is increasing two times faster than private-sector wages, according to the Federal Reserve Bank of St. Louis’s handy website. As of June 1, the Consumer Price Index had surged by 9.1 percent compared with the index at the same time last year. Average wages have risen 4.2 percent over the year.

To slow the economy and bring down inflation, the Federal Reserve is raising interest rates. The silver lining is that Americans are still fully employed – the 3.6 percent jobless rate is back to pre-COVID levels – and have used this leverage to secure the hefty wage hikes.

But workers’ standard of living is eroding because their paychecks can’t keep up with a one-year increase in apartment rents exceeding 10 percent and gas prices that have dropped recently but are still well above last year’s prices. The grocery tab is shocking too. The Bureau of Labor Statistics reports that potato prices are up 16 percent, ground beef up as much as 12 percent, and flour is 40 percent more expensive due to the war in Ukraine, the world’s breadbasket.

Inflation is changing the economy in fundamental ways, and it looks like Americans already exhausted by two-plus years of COVID are in for more tough times. …Learn More

Retired Couple Chopped Down $40,000 Debt

While living in New York City, Clifton Seale and Charles Gilmore piled up an enormous amount of credit card debt for basic expenses and frequent dinners out.

After retiring – Seale was a librarian and Gilmore a clergyman – the couple were notified of a $200 rent increase on their Queens apartment. With so much debt on the books, they realized they could no longer afford New York City, and after a few visits to see friends near the Delaware seashore, they moved there.

“I like to say I flunked retirement because I found out neither of us could afford to live on the pension and Social Security,” Gilmore said.

Although Delaware was a less expensive place to live, they didn’t turn their finances around until they found the non-profit Stand by Me 50+, which offers free financial coaches to Delaware residents over age 50.

The couple, who have been together 35 years and married for 8 years, have a decent income by rural Delaware’s standards, if not New York’s. Their combined income is about $70,000 per year. They were able to buy a $185,000 three-bedroom house in Lincoln, Delaware, after a friend helped with the down payment. Their $1,150 mortgage isn’t much more than the rent on their one-bedroom apartment in Queens.

Credit cards were Seale and Gilmore’s big issue. They owed about $40,000, including moving expenses and some new furniture purchased in Delaware. Both of them had retired at a fairly young age – 62 – but felt they had no choice but to go back to work. Gilmore found a job at a local operation for a national hospice organization and, last September, landed a part-time position as a Presbyterian pastor. Seale has worked at a non-profit that helps seniors who want to age in their homes.

The extra income helped, but the debt was still going up. “We weren’t paying off as much [debt] as we were spending,” Seale said. “No matter what I did, everything was still falling down around my shoulders.”

They just needed to get rid of the debt. …Learn More

Belongings on the lawn

Crisis for Renters Threatens to Get Worse

Many unemployed and underemployed workers have run out of options for paying the rent. The National Low Income Housing Coalition, the Aspen Institute, and other organizations estimate that up to 40 million renters risk being evicted this winter. Congress is currently negotiating a new COVID-19 relief package but it’s not yet known whether it will extend a CDC moratorium on evictions or go beyond the Cares Act last spring and provide rental assistance to help renters and, by extension, their landlords.

Squared Away spoke with Sarah Saadian, vice president of public policy for the National Low Income Housing Coalition, about what she describes as an impending calamity.

Q: How bad is the current situation?

Saadian: It’s really hard to get data on how many people have been evicted because there isn’t a national database – only state data. But we know that nearly one in five renters are behind on their rent, and they’re disproportionately Black and brown renters. When the CDC moratorium on evictions expires Dec. 31, renters are going to owe somewhere between $25 billion and $70 billion. That’s a huge amount of back rent that renters realistically can’t afford to pay off. So what we’re likely to see is a huge increase in evictions and, in the worse cases, homelessness unless Congress extends the moratorium and provides really robust resources for emergency rental assistance.

Q: What do you expect if the moratorium isn’t extended beyond Dec. 31?

It would be a calamity. Because of the loopholes in the CDC moratorium and because of the sheer amount of rent renters owe, if there’s any gap between when the moratorium expires and the Biden administration takes action – if they do – you’re going to see potentially millions of people lose their homes in the dead of winter when we’re dealing with a resurgence of COVID. It’s an emergency on top of an emergency.

Q: A UCLA study said that 44 states had moratoriums but that 27 have lifted them and that the resulting evictions have resulted in more than 10,000 deaths. Make the connection between housing and health.

When low-income people are evicted from their homes, they don’t have a lot of good options. They either are doubling or tripling up with other families, or they go into homeless shelters. In either case, it’s more difficult to social distance, and it’s easier for the virus to spread. If Congress doesn’t take action, it harms all of us. Not only does it mean more of us dying from COVID but it puts more strain on our health care system. 

Q: This is a complicated issue, because small landlords have to pay their mortgages and can’t necessarily afford to cover tenants’ rents. What is your position on that?

The best solution for both renters and landlords is emergency rental assistance because that eliminates the back rent renters owe and makes up the lost income landlords need to operate their property. It is not every day that landlords and renters can agree. A lot of landlords don’t like the moratorium but it’s absolutely essential to have an extension of the CDC moratorium at least until state and local governments can distribute rental money to people in need. Even if Congress provides emergency rental assistance, but doesn’t extend the CDC moratorium, then millions of people will still lose their homes.

Q: You mentioned minorities are particularly affected by evictions. How about particular states or income groups? Rural vs urban renters? Learn More

More Retirees Today Have a Mortgage

In one significant way, retirement is materially different than it used to be: far more retirees are still trying to pay off their houses.

Bar graph showing the number of retirees with mortgagesThirty years ago, just one of every four homeowners in their late 60s to late 70s still had a mortgage – today, nearly half do. Once people hit 80, mortgages used to be extremely rare – only 3 percent had them. Today, it’s one in four, Harvard’s Joint Center for Housing Studies recently reported.

Retiree’s financial condition depends on much more than how much they spend on housing – in particular the size of their retirement savings accounts and Social Security checks. But rent or a mortgage payment is typically the largest item in the monthly budget. Being free of both can be a significant boost to one’s standard of living in retirement.

Jennifer Molinsky, a senior research associate at Harvard’s housing center, described several developments over the past three decades that may explain the dramatic increase in the share of retirees with mortgages.

First, she said, Americans today “seem to have less aversion to debt” than the generation that grew up after the Great Depression and was instilled with frugality. Although consumer debt levels always ebb and flow with the economy’s cycles, total debt as a percentage of disposable income is significantly higher today than it was in the 1990s. The 1986 tax reform act also made mortgages a more attractive form of debt to hold. The reform eliminated the income tax deductions for interest on credit cards and other types of consumer debt, with one exception: mortgage interest.

Having a mortgage isn’t necessarily a bad thing. Mortgage rates have fallen dramatically in recent decades. Many retirees who are still making monthly mortgage payments were able to reduce the payments by refinancing old, partially paid off mortgages into new 30-year loans with lower interest rates.

But another factor that may have pushed up the share of retirees with mortgages has been the long-term run-up in house prices, relative to earnings, which makes it increasingly difficult to pay off a house before retiring. In the late 1980s and early 1990s, house prices were about three times the typical household’s earnings, according to the housing center. Today, prices are more than four times earnings. …Learn More

Millennial moving into an apartment

Class of 2019: Low Rent Key to Survival

The first and arguably most important decision a new graduate will make is how much to pay for rent.

If it’s too high, the rent – on top of those annoying student loans – will push out other priorities necessary to prevent financial trouble down the road.

Rick Epple, a certified financial planner in Minnesota’s Twin Cities area, counsels his daughter’s friends and clients’ children entering the labor force to keep their rent at around 20 percent of their income.

“Nobody ever talks about what they should spend,” he said. He worries about young adults who pay a third of their income – the standard recommendation – for an apartment. If the rent blows a hole in the budget, paying student loans every month and on time becomes a much bigger challenge.

A paycheck, Epple said, “just goes quick.”

A manageable rental payment also leaves room to prepare for the inevitable unexpected expense – and, yes, retirement. …Learn More