Baby Boomers & Strategic Default
Survey Study Of YouWalkAway.com Clients In Relation To Retirement & Foreclosure
Baby boomers, generally considered those born between 1946 and 1964, face a myriad of issues as the larger-than-average generation ages. The cohort that demanded an increase in the production of consumer goods – homes included – is now hitting retirement age. This means fixed incomes and reduction in living space requirements. While this is to be expected for anyone hitting the retirement milestone, this has been an especially difficult transition for the boomers due to the reduction in value of dream homes purchased at the peak of the market to house their entire families. Facing high mortgage payments, increased maintenance, and a reduction in income, many of the boomers are choosing to walk away. Many others claim to have no choice.
Compared with their younger counterparts, baby boomers are generally more likely to have depleted their savings, retirement and other accounts prior to making a decision to strategically default, leaving them with little to no safety net keeping them above the poverty line during what should be their golden years. Many of the clients that You Walk Away works with on a daily basis are in their late 50s or 60s and during a time when they should be planning for a retirement of leisure and relaxation, they are instead consumed with debt, continued unemployment, and a looming fixed income.
From the experience of You Walk Away, in stark contrast to younger generations that saw walking away from an underwater home as a strategic business decision, baby boomers are often more concerned with the negative stigma associated with defaulting on a mortgage contract. Rather than seeing the cost versus reward, they depleted their savings accounts because they had never missed a payment and could not fathom breaking a contract like a mortgage. They weren’t raised this way, and the departure from the traditional view of the American Dream often took some time. However, in that time, many of these Baby Boomers inadvertently removed their own safety net of 401ks, retirement funds and savings accounts in order to maintain an underwater property.
In the below graph, we crossed the data with age bracket
One story from a client of ours who created her own blog called “Adventures In Default” stands out. They didn’t deplete their savings, however they saved through the process. She writes:
“It will be 2 years in October our foreclosure was final. Our family is all doing very well now, even Mom. We are so thankful we had to ability to help our family when they most needed us. We have proof, ethically, and every other way, no doubts, we made the right decision. We’re so glad we put our money into savings rather than throwing it away to feel better about keeping a contract to MERS. (Don’t know who MERS is? Neither does anyone else.) Because we walked, we were prepared for a major family emergency without throwing us back into more debt. Now that our son is here, we sometimes wish we had the space we did in the other house, but, we sure don’t miss the expense of it! And, he’ll only be with us until the end of the year at most. So we choose to be thankful for a home we can afford that’s full of a family who has really pulled together for the things that count most in life. No regrets.”
Some came to us before they exhausted their savings and others came after. Left with little to no savings, an underwater home, unemployment, and the looming thoughts of growing old and potential health problems, the encroachment of the golden years is no longer so glistening. It may me wracked with more stress, anxiety, fear and worst of all, hopelessness.
Here is the complete survey taken from our clients that you may find interesting: