Boomers bet on property for support

Section: Money, Pg. 01b

Baby boomers love their real estate. So much that they're counting on it to help them fund retirement.

Since most of them haven't saved much, they'll probably need it.

One in four Americans born from 1946 to 1964 own more than one property, according to a survey of nearly 2,000 boomers done this spring by Harris Interactive for the National Association of Realtors. They're also much more likely than the total U.S. population to own their primary residences.

Boomers have "an almost insatiable desire for real estate," David Lereah, the NAR's chief economist, said in a statement. They see real estate as "a way to build and protect a nest egg."

Boomers own 57% of vacation homes and 58% of rental property, according to the NAR. Beyond their primary residences, 13% of boomers own vacant land, 8% own rental property, 7% own a vacation or seasonal home and 2% own commercial real estate.

Why vacant land?

"For a lot of people, it's a dream to have a second home, but they really can't afford it," says Peter Francese, founder of American Demographics magazine, who was asked by the NAR to help interpret the survey. "So, they buy a lot."

At the same time, many of those surveyed say they aren't financially prepared for retirement. While 37% say they just have enough to make ends meet, 17% say they're having financial difficulty.

Real estate ownership has become a key part of boomers' retirement plans, says Alicia Munnell, director of the Center for Retirement Research at Boston College. That's largely because the national savings rate is so low, she says, and the availability of pensions is declining.

Unlike previous generations of retirees who tended to pay off their mortgages and live "rent-free" in retirement, many boomers see their homes as money in the bank, Munnell says. Many previous retirees also chose to hang on to a house to pass down to their children.

By contrast, boomers are more likely to use the equity in their homes, through home equity loans or reverse mortgages, to finance purchases or to help fund their retirements, Munnell says.

"In the old days, you knew you had your house to live in when you retired," Munnell says. But given most boomers' modest retirement savings, "You really are not going to be able to hold on to it and not touch your house. You're going to need the money in your house."

For boomers, vacation homes aren't seen as merely a chance to have fun in the sun or on the ski slope or at the lake. Four in 10 boomers who own a vacation home intend to make it their primary home eventually, the NAR survey found.

"Folks who own second homes are testing the waters to see if they want to live there when they retire," says Mark Bass, a financial planner in Lubbock, Texas.

(c) USA TODAY, 2006