New York Times journalist Bob Tedeschi writes an eye opening article about how the housing slump is hitting baby boomers especially hard. In Baby Boomers Under Water, he writes that many middle-aged homeowners had been so seduced by the rising prices of years past that they failed to save for retirement and may now owe more than their homes are worth.
The Center for Economic and Policy Research in Washington released a report which estimates that 30 percent of homeowners aged 45 to 54 are “under water” on their mortgage. (About 15 percent of older baby boomers, 55 to 64, fell into that category as well.) Other interesting notes from the report:
- Baby Boomers in the 45-to-54 group saw their overall net worth plummet by about 45 percent over the last five years, to a median level of $94,200 from $172,400.
- Five years ago, the median baby boomer household, with people aged 45 to 54, had enough net assets to generate about $14,000 in annual interest once the homeowners reached age 65. Now, that figure is just under $8,000.
The center used 2004 consumer finance data from the Federal Reserve Board that measured a typical consumer’s wealth and then reduced those values in accordance with the drop in the Standard & Poor’s 500-stock index and the median sale price of a house as tracked by the National Association of Realtors. The November S.&P./Case-Shiller 20-city price index was also factored into the projections
What does the article suggest Baby Boomers do? Read the article at the link below.