For millions of Americans, the heart of their retirement assets is their home.
Purchasing a home is the best way to save money and invest it into something that will grow in value over the long-term.
The issue that many money managers are seeing is an increasing number of seniors who owe on their homes as opposed to owning their home free and clear.
"Between 1998 and 2012, the proportion of seniors carrying a mortgage rose from 23.9% to 35%, according to Fannie Mae. Not only are more retirees carrying a mortgage, but they also owe more than in the past. According to a report from the Center for Retirement Research, using data from the Federal Reserve's Survey of Consumer Finances, from 2001 to 2013, the housing debt-to-income ratio rose by 52 percentage points for Americans 55 and older, while it grew by a much lower rate for younger households." - Journal of Accountancy
One of the largest causes of this trend is that people aren't buying their homes until later in life. As people begin to purchase homes in their 30s or 40s, they still owe money on their first mortgage. Also, through several economic downturns, many people took out second mortgages.
The simplest solution: buy your home when you're young. If you purchase your home in your 20s or 30s, you're far more likely to have your mortgage paid off by the time you retire.
"According to the New York Times in 2017, the average homeowner in the U.S. has a net worth of $195,400. To put that figure in perspective, the average American renter only has a net worth of $5,400 - 36 times less than that of the typical homeowner. Speaking to CNBC in 2017, financial adviser David Bach calls buying a home "an escalator to wealth." - The Nest
Since a home is so much of your retirement and net worth, the sooner you start saving that money in real estate, the faster you can build your net worth.
King Realty Group does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.