Approximately 40 million baby boomer women are the largest generation to reach age 42 to 60 in history, but financial security may not await them unless they make wise choices in housing, suggests a major study called Baby Boomer Women: Secure Futures or Not? by the Harvard Generations Policy Program, the Harvard Generations Policy Journal and the Global Generations Policy Institute.

According to the findings, boomer women, those born between 1946 and 1964, spend more, acquire more debt, and are less likely to have traditional pensions, spousal benefits, or retiree health coverage. With women earning 76 cents to every man's dollar, women reach retirement with smaller savings that must last over a longer lifespan -- women tend to live 79.9 years, four years longer than men. "From 2020 to 2030, when older boomer women will be 64 to 74, they are projected to face an income shortfall of at least $400 billion."

In addition, boomer women are more likely to be divorced or never married, and receive less from the retirement income system like Social Security than homemaker wives with breadwinner husbands. Despite higher education, half of boomer women don't have access to pensions or other retirement plans. Half of boomer women are working in low-paying jobs.

That means that boomer women who are "counting on home equity extractions to finance their current life styles and retirement futures may be in for a shock if/when housing values level off and decline. For boomer women, how financially secure they are likely to be as they age will be greatly influenced by their present and future housing choices."

The report says unequivocally that women of the baby boom generation who own their homes (either alone or with a spouse) will be at an economic advantage. Homeowners can tap into equity while renters will be "at a disadvantage in terms of wealth accumulation and will enter their senior years with sharply lower wealth."

Women in the leading edge of the baby boomers (born 1946-1955) made 45 percent less money than men and achieved a homeownership rate of 82 percent, but by 1990, fewer women were in the workforce (71 percent) and the male-female wage gap had widened to 49 percent. However, the trailing edge of boomers are currently on a higher income and wealth trajectory than the leading edge, says the report.

Married baby boomers (67 percent) are doing the best economically, but 11 percent live alone and have the lowest incomes, and 9 percent are single parents. As they age and retire, more will fall into the bottom income quartile, making it unlikely that fewer boomer women will retire early.

They will face steep housing costs. "As of 2003, 7 percent of baby boomer women in married couple households, 21 percent of women living in single-parent households, and 22 percent of women living alone were spending more than half of their income on housing. With such constrained budgets, saving for retirement and health costs is seriously hampered. Those with lower housing costs aren't off the hook -- they will face rising utilities, insurance, property taxes and maintenance bills."

Housing costs will tend to be lower for boomer women who own, have relatively low fixed mortgage payments or have paid off their mortgages in full. "The median housing cost burden of senior renters in the bottom income quartile is 33.6 percent, but for senior owners it is 18.3 percent." Moreover, they have more money available for non-housing costs, and they can tap into equity. By contrast, about 35 percent of boomer women who rent are in the lowest income quartile, and this share is likely to grow as boomers age and become more infirm.

Debt is an issue -- more seniors carry debt than previous generations. The median mortgage debt for 45-54 year-olds doubled from $38,000 in 1989 to $78,000 in 2001. Boomer women may also be reluctant to leave their homes and trade down to lower their housing operating costs in their older years. Boomer women (47 percent) tend to live in the suburbs in homes built prior to 1985; this spatial isolation will make them more reliant on automobiles and they will pay more for services and care to be brought to them.

Moving to assisted living housing appears unlikely as the costs will quickly overwhelm the equity stake they took out of their previous homes when they sold. Only 6 percent of women outside institutional care live with their children, and 13 percent live with another relative besides a spouse or child. An astounding 38 percent of senior women live alone, and this skyrockets to 47 percent among those aged 75 or older.

While solutions such as government rent subsidies to aging boomers aren't available as yet, it's clear that something needs to be done. Here are a few suggestions:

• Perhaps the building industry can come up with a new kind of housing for seniors besides the highly successful Del Webb model that caters to wealthy, married active seniors with attached housing that allows neighbor bonding and support as well as shared activities. How about boarding house rooms that seniors can own much like a condominium?

• The lending industry could come up with a new type of loan for seniors for certain housing products such as boarding house-type cooperatives or hospital-managed housing.

• Cities can set aside portions of mixed-use developments or urban in-fill areas near hospitals and shopping for co-ops that cater to low to middle-income seniors.

• Realtors can urge city planners, developers and builders to include shared-wall housing for seniors that offer security, greenspace and activities for senior women that is universal in design and that can be easily resold to new buyers.

• Churches, local colleges and other institutions can provide housing subsidies to senior women in exchange for much needed volunteer services such as tutoring, data entry, or child care.

Published: June 8, 2006

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