Should Retired Baby Boomers Homestead Their Homes?

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The other day, someone asked, “Should I homestead my home? Does that gain me anything?” Good question. To tell the truth, I wasn’t up on this subject myself, but wondered if homesteading has some benefit for retired Baby Boomers.

To begin, what is “homesteading?” According to Wikipedia:

The homestead exemption is a legal regime to protect the value of the homes of residents from property taxes, creditors, and circumstances that arise from the death of the homeowner spouse.

Such laws are found in the statutes or the constitution of many of the states in the United States. The homestead exemption in some states of the South has its legal origins in the exemption laws of the Spanish Empire. In other states, they were enacted in response to the effects of 19th-century economy.

Homestead exemption laws typically have four primary features:

  1. Preventing the forced sale of a home to meet the demands of creditors, usually except mortgages, mechanics liens, or sales to pay property taxes
  2. Providing the surviving spouse with shelter
  3. Providing an exemption from property taxes on a home
  4. Allowing a tax-exempt homeowner to vote on property tax increases to homeowners over the threshold, by bond or millage requests

For the purposes of statutes, a homestead is the one primary residence of a person, and no other exemption can be claimed on any other property anywhere, even outside the boundaries of the jurisdiction in which the exemption is claimed.

In some states, homestead protection is automatic. In many states, however, homeowners receive the protections of the law only if they file a claim for homestead exemption with the state. Furthermore, the protection can be lost if the homeowner abandons the protected property by taking up primary residence elsewhere.

That’s a mouthful! Basically, having a homestead filed on the property where you live protects you if creditors try to force a sale to pay during a financial hardship…except for mortgages, mechanic liens and property taxes. And if you die, it prevents creditors from selling your home out from under a surviving spouse.

So How do Boomers Homestead their Residence?

It turns out that in many states, Boomers have automatic “Homestead” rights – you don’t have to do anything. Asset Protection Planners notes:” Some states, such as Florida, Iowa, Kansas, Oklahoma, South Dakota and Texas have provisions, if followed properly, allowing 100% of the equity to be protected. Other states, such as New Jersey and Pennsylvania do not offer any homestead protection.” So the first thing to do is to determine whether you need to do anything in the first place.

What does your state allow? Here’s a chart that will help you quickly determine your homestead rights and amounts.

The states and territories that do have homestead laws typically have online forms that can be completed and recorded. Usually, these must be notarized as well. Google your state to determine the procedures to be followed.

Be advised, however, that lenders will typically require you to eliminate a homestead declaration before refinancing a residence. They don’t like having it clouding the property title.

The Bottom Line for Baby Boomers

Homesteading a residence seems to make the most sense if you are having financial difficulties or are in ill-health. It’s an added layer of protection. Even though your state may have automatic homesteading in place, there are circumstances where having a formal, recorded document adds protection and may even increase the amount covered. Baby Boomers should each determine  what is best for their unique situation.

 

When is the Best Time for Baby Boomers to Sell their Home?

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Baby Boomers who own a residence ultimately face the issue of whether they should sell their home or retire in place. Many decide to downsize in retirement or move closer to their kids. So the question is, “What is the best time to sell your home?”

Historically, the best month for quickly selling a home at the highest price is May (don’t ask me why). Spring is better than Winter, and if you live in a warm climate anytime may be good. Just remember, working families often move during the summer school break to accommodate their children. Other major considerations are:

  • How much can you get for your home? Take a look at the prices for sales of similar properties in your local area by doing  a zip-code search on Zillow or Realtor.com.
  • How long will it take to sell your property? Is it a seller’s or buyer’s market (i.e., you will get a higher price and a faster sale when there are more buyers than sellers)?
  • What are the interest rates? Do buyers have access to attractive financing programs? How much income does a buyer need to qualify to purchase your home after a normal 20 percent down payment?
  • Have you lived in your home for at least two years so you qualify for tax exclusion on the first $500,000 of profit (for a couple)? If you are selling rental property or a vacation home, consult with an accountant first to determine the tax consequences for your income level.
  • What are the anticipated selling costs? Do you have to fix some things up before listing the property? What are local Realtors charging? Will you get enough profit to implement your plans (i.e., the underlying reason you wish to sell your home)?

Selling one’s home is not a decision to be taken lightly. Most Boomers have their major retirement assets tied up in home equity. It pays to be informed. I suggest digesting these quick articles to educate yourself:

The Bottom Line for Baby Boomers

Baby Boomers have many reasons for wanting to sell their homes, vacation properties or rentals. Usually this centers around wanting to downsize, being closer to family or to consolidate finances. It is a process, so be prepared to take time and do your homework. The most important thing is that the sale successfully opens the door to what you want to follow.

Bicycling is Wonderful Recreation for Retired Baby Boomers

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Whew!. I just finished my early morning ten-mile bike ride. As usual, it was wonderful. The world was just awaking on this fine Spring morning. Traffic was minimal. The sun in southern California had not yet turned toasty. And I feel so invigorated when I’m done. It’s good to be alive!

Bicycling is a wonderful experience for older people. It exercises the heart, burns calories and tones the body. And it leaves riders with a positive attitude (really!). Plus, it’s fun! This is especially true when biking with friends along scenic paths and letting go of all your concerns for a while.

Biking to lunch or brunch is a favorite activity among my group. Stimulating conversation, good food, a little wine or beer – It’s makes for a perfect day!

I still ride my 25-year-old Trek bicycle which has been through several sets of tires. It has a lot of gears, which I appreciate as I’ve gotten older. Upgrades, like a bike rack, speedometer, and helmet, gloves and extra water bottles all came from my local Walmart or Target. I’m a cheap bicycler, but still a sight to see in my tight (and heavily padded) shorts!

If bicycling piques your interest, I suggest starting by reading these fine articles:

The Bottom Line for Baby Boomers

Bicycling is an exhilarating experience…and it’s affordable for everyone! It is also healthy. In fact, it’s hard to find anything negative to say about bike riding, especially among Boomers. My advice – Join (or start) a local bicycling group with people of your age bracket. You won’t regret it.

 

Every Boomer Needs a Disaster Kit

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In 1989, my girlfriend (now my wife) and I resided in Silicon Valley when the Loma Prieta earthquake (a 6.9!) hit. The initial quake was strong and over the next few days, there were hundreds of aftershocks. Electricity and water were out for several days in the area where we lived. There was no phone service. All the local stores and gas stations were closed; some heavily damaged. Fortunately, we had a full refrigerator, canned food and plenty of wine to see us through. But we were overjoyed when the lights finally came on again after three-to-four days. If the lack of services had continued for much longer, everyone would have been in trouble.

I live in southern California now and a major earthquake is always predicted as just around the corner. Plus, every summer seems to bring devastating fires and evacuations. Not to mention a nearby defunct nuclear facility or the possibility of a tsunami appearing off the coast. It’s the risk we accept for great year-round weather.

Ask yourself, “What would I do if a natural or man-made disaster hit my area?” Could you and your family survive a hurricane Katrina or power grid failure? Does your family have a plan in case you are separated? Do you have enough stored water, non-perishable food and medicine to last a week or two until help can arrive? How about your pets? If mobile phone services die, do you even own a battery-power radio to find out what is going on?

Now that we are older Baby Boomers, we recognize the need to have a home survival kit. It is a simple thing to prepare and maintain. And it can literally mean the difference between survival and death in an emergency situation.

What Every Baby Boomer Needs to do NOW!

How can you get prepared. It’s easy. Others have already done the home for you. Start by taking a few moments to digest these great articles and checklists:

The Bottom Line for Baby Boomers

No one likes to think about the possibility of a disaster hitting their area. But if it does and you are not prepared, the consequences can be devastating. Your survival – and that of your loved ones – can literally depend on the amount of forethought invested in preparing for this possibility. I strongly urge every Boomer to take this issue seriously and prepare accordingly. It takes so little to dramatically enhance your survival odds if the worse happens.

 

 

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