Monetizing the House, the Old-Fashioned Way

Sarah Purcell's house

When Sarah Wentworth Purcell's husband died in 1776, she became a gentlewoman in reduced circumstances. To generate income she took in roomers.  Today, writes Amy Zipkin in The New York Times, Airbnb and other rental sites enable retirees, predominantly women, to monetize their homes in the same way. (Yes, everything old is new again.)

Short-term rentals generate extra money without requiring the homeowner to take on new debt. No home equity loan. No reverse mortgage. In addition:

Rentals may allow the homeowner to remain in a house tbat's otherwise unjustifiably large for an empty nester. Arranging rentals keeps the homeowner healthily active. And the homeowner meets a stimulating stream of new people, perhaps including visitors from around the world. She might even get to know someone who's about to become famous.

Sarah Purcell did. In 1777 one of her roomers was a Scot waiting for his ship to be built nearby. The ship was the Ranger, and John Paul Jones became our nation's first navel hero.

Sarah's home still stands in Portsmouth, New Hampshire, now known (sorry, Sarah) as the John Paul Jones House.

Do Boomers Need an Efficient-Aging Expert?

Marc Freedman, founder of Encore and a "thought leader," worries about his fellow Boomers.

Some Boomers will be around for another half century. Many will shun retirement. They'll take on new jobs or projects, pursue long-delayed personal ambitions. Freedman doubts they can do it on their own.

In his WSJ column, Freedman suggests new rituals for graduating from the rat race, and new government interventions, such as "preview" Social Security payments.

One idea your obedient blogger finds downright scary: yet another "tax-favored" investment account. This one would provide supplementary income for those leaving big-money jobs for low-paying public service. Just what we need – another few hundred pages of IRS rules and regulations. Can't anybody put money aside in a couple of mutual funds or ETFs without government intervention?

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In the 19th century, children went to grammar school, then went to work. In the 20th century, children became teenagers and went on to high school, delaying adulthood. Freedman sees that the 21st century is creating a similar delay in later life. Teenagers still have to figure out how to cope. Perhaps Boomers can be trusted to do the same.

Boomer Inheritance Boom Fizzles, But Wait Until 2031!

Some wealthy parents of Boomers are still around, and those that aren't seem to have favored philanthropy – or dynasty trusts – rather than outright transfers of wealth to the next generation. See The New York Times: 

The top 1 percent of households owns about 35 percent of American wealth, more than the entire bottom 90 percent does. But at least at the moment, growing inequality has not resulted in a big boom in inheritances. Since the 1980s, the value of inherited wealth has only drifted upward slightly. In fact, wealth transfers as a proportion of net worth have fallen, to 19 percent in 2007 from 29 percent in 1989.

Maybe the Boomers' heirs, the Gen X and Gen Y crowd, will be luckier. Starting in 2013, the consulting firm Accenture forecasts, "10 percent of the country’s total wealth will change hands every five years through inheritances, estates, gifts and the like."

What do you think? Will Boomers conserve and pass along the family wealth? Or will they joyfully spend the kids' inheritances?

Boomers: Not Your Grandfather’s Retirees

This 1965 Equitable ad must have been one of the cheeriest ever produced for annuities. Admire the work of Charles Saxon, the New Yorker cartoonist who sketched the foibles he observed in and around New Canaan, Connecticut. Saxon rarely took commercial assignments.


Can you imagine today's Boomers identifying with Saxon's gents in suits? Me neither. The Wall Street Journal ($) surveyed ways that business seeks to accommodate the Boomer wave of retirees. Problem: 60-ish Boomers do not wish to be "accommodated." Not surprising. Their show-biz contemporaries include Sly Stallone, Meryl Streep, Steve Martin and Helen Mirren, none of whom look ready for a long-term-care facility.

Boomers nearing retirement are either wealthy or not – and not solely in the sense of net worth. My father had it right: "Your health is your wealth." Assuming good health, many affluent Boomers will keep busy and keep working.

Forbes' Erika Andersen sees Boomers extending their careers, forcing the young to create their own employment. Martin Zwilling sees a different trend: Boomers are Driving a New Entrepreneurship Boom.

Best strategy for young wealth managers? Treat each Boomer retiree as the individual he or she is. And please don't shout or speak slowly unless asked.

The Great Recession? Good As Over!

Ignore the preceding post. Newly inspired, Boomers are about to launch lucrative second or third careers, achieve unheard of savings rates and make the 2010s a decade for the economic record books.

Their inspiration? The new Star Trek film, an origin story that receives rave reviews from, among others, the NY Times and Washington Post.

The Post's Ann Hornaday:

The marketing campaign for the movie has suggested this is "not your dad's 'Star Trek.' " That's wrong -- no middle-aged Trekkie will be able to hold back tears when the Enterprise first comes into view.

Yes, reinvigorated by the myth they grew up with, Boomers will go where no generation has gone before. Some how, some way, and with a little help from their wealth managers, they will Live Long and Prosper.