What can you do to preserve your nest egg if
real estate prices fall?
If you are like most So. Cal. Homeowners, your personal net worth has grown hundreds of thousands of dollars over the last five years, simply on the increasing value of your home.
Such increases in personal wealth have spurred consumer confidence and the broader So. Cal economy. Maybe you're even thinking that you've now got a better shot at some true retirement accumulation that you didn't have before, with several hundreds of thousands of dollars more in your home than you had five years ago.
Are you ready to watch that nest egg disappear if the housing market falls 15-20% over the next couple of years?
If you are like most Americans, the two greatest assets you are building your financial future upon are the value of the equity you are building in your home, and the accumulation in your retirement accounts.
Yet the harsh reality is that 75% of workers age 55-64 have
less then $56k saved for retirement and we now have a housing
market in So. California that is poised to see potential serious
declines for the next several years (see our News Page on the
latest prospects for the So. Cal. housing market).
Add to that the national savings rate (how much of our income
we save vs. spend) has gone from almost 12% in 1980, to a negative
1% presently!
While the predominant condition describing retirees, Baby Boomers, and Generation X'ers today could be described as "House Rich and Cash Poor," if the housing market declines for the next couple of years as adjustable rate mortgages can not be kept up and a potential foreclosure "perfect storm" arrives, we may be seeing a generation who will become "House Poor and Cash Poor," when it comes to eventual real retirement resources.
