In Retirement for Verizon employees - who are considering a move from homeownership to renting - it may be a way to preserve capital and reduce housing-related financial stress that (Advisor Name) of The Retirement Group, a division of Wealth Enhancement Group, suggests (Advisor Name) evaluate carefully in the face of rising market uncertainty.
As rising home prices squeeze retiree budgets, (Advisor Name) is a representative of the Retirement Group, a division of Wealth Enhancement Group, which helps Verizon retirees weigh the pros and cons of renting to determine if it fits their long-term financial plan and the current housing market complexities.
In this article, we will discuss:
1. Trends in housing and housing affordability for retirees today.
2. Rising interest rates affect potential buyers.
3. How to decide between renting versus owning a home in retirement.
So you're a retired executive from Verizon navigating rising costs, longer lifespans, high medical costs, and volatile markets. We naturally ask ourselves here whether it makes sense to cash in on our largest investment: our homes. With average U.S. house prices soaring to nearly USD 360,000 - a third higher than a few years ago - it may be time to sell and invest the proceeds instead in a rental property. The details of that decision are below.
Current Housing Market Trends
Analyzing the current housing market, Realtor.com says in 45 of 50 major U.S. metropolitan areas renting is cheaper than buying a starter home. In addition, the Atlanta Federal Reserve Bank reports national housing affordability is soaring like it was during the housing bubble of 2006-2007. These statistics are especially relevant for seniors: data show the average U.S. house price almost 17 times the average annual Social Security benefit - a ratio never before the 2008 Lehman Brothers collapse.
Historical Comparison of Home Prices & Rents.
As proof of concept, look at a 1987 comparison of average U.S. home prices versus rents. This graph illustrates how current house prices are far above rents - comparable to what existed before the housing bubble burst in 2006-2007. Realize that the economic advantage of homeownership is the elimination of rental costs. But renting may be financially feasible for retirees now.
Steady Interest Rates Affect Potential Buyers.
Even though many Verizon retirees own their homes outright or have older mortgages at lower rates, rising interest rates could affect potential buyers. Increasing borrowing costs may drop real estate values, so you could delay selling your home and lose gains that could not be recouped. It would take a decade before prices fully recovered after the last housing peak in 2006. Retirees selling their homes during this period could invest in lifetime annuities or watch stocks and bonds rise by about 80%.
Exploring Alternative Investment Options
In light of these observations, look into other investment vehicles such as real estate investment trusts (REITs). So you can sell your home and invest in publicly traded landlords with a mouse click. The Armada residential REIT ETF also invests in residential REITs - single-family homes, apartment-complex operators, and companies that operate manufactured-home parks and senior-living communities.
The Individual Decision to Sell & Rent.
Yet the decision to sell and rent is an individual one and involves several important considerations. Your dream location, potential sale price, tax implications, rental costs, plans to leave a property to heirs, and costs of moving. While traditional wisdom holds that owning a home in retirement from Verizon companies is better - ask a financial planner about your specific situation.
Renting in Retirement: Pros and Cons.
It helps financial planner Malcolm Ethridge recommend against renting during retirement because he wants fixed costs that go with a fixed retirement income. The landlord is liable for setting the annual rent increase, so you can hardly put money aside for other monthly costs. And according to Adam Wojtkowski, an adviser with Copper Beech Wealth Management, entering retirement with no mortgage is ideal because housing is typically the largest monthly expense. By owning your home outright you avoid the volatility of rents.
The Risks of Renting and Selling Now.
But renting involves some risk. As Brian Schmehil of the Mather Group points out, renting subjects retirees to the landlord's decisions and makes them vulnerable to financial pressures in high inflationary environments as they age. These arguments for homeownership are complex.
With housing costs so high now, Wojtkowski suggests renting for now at least. Putting off selling until the housing-market crash happens may result in an extended and uncertain waiting period. Schmehil also says selling when home values are historically high is advantageous. Capture the equity in your home and retire early without reverse mortgages or potential problems selling later in life.
Flexibility & Lower Responsibility of Renting.
Renting also allows for greater mobility in terms of location - closer to your children or grandchildren. A second benefit is less responsibility for home maintenance and repairs. Renters are relieved of the maintenance burden, financial planner Ann Covington Alsina says. Any problems such as broken appliances or a leaky roof pass to the landlord.
The Downsizing Option
Alternatively, downsizing frees up capital without driving up rents. You can sell a larger home and move to a smaller one and profit from high home prices while controlling your housing situation.
Renting in Retirement - Real Life Experiences.
The experiences of many baby boomers support selling and renting. For example, my late friend Vincent Nobile, who lived a great life as a homeowner, rented in his 80s. He liked not having to worry about home maintenance, property taxes, or investing his earnings - without the responsibility of property ownership. Asking him if he preferred owning a home he laughed and shook his head.
Making the Right Decision
The decision to sell or rent is ultimately a personal one. Seek professional advice from financial planners and consider current housing market trends. Examining financial advantages and disadvantages, weighing impact on retirement income planning and personal preference, Verizon retirees can make an educated decision that reflects their long-term goals and financial security.
In a study in the Wall Street Journal on May 15, 2023, more baby boomers are renting than owning homes because house prices are skyrocketing. The study says among those age 60 and older, renters have increased by 15% in the last five years. Those changes in housing preference reflect a financial prudential boomer trend to save for retirement and avoid homeownership amid skyrocketing real estate prices.
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Think of the housing market as a turbulent sea with rising tides. Your home is your ship as a retiree navigating the financial storms. However, rising house prices mean your ship is in rough seas and may capsize. Some retirees from Verizon are taking a new tactic to weather the storm. They're trading their ships for a rental lighthouse. Renters get stability and shelter from the volatile housing market so you can retire without the hassle of property maintenance and high homeownership costs. It's like a safe harbor from which to sail toward financial freedom and flexibility.
Sources:
1. Banaszak, Michelle. 'Should You Sell Your House And Rent When You Retire?' Rocket Mortgage , 15 Feb. 2024.
2. Why Renting for Some Retirees May Be a Better Option.' MassMutual , Sept. 2022.
3.'With House Prices This High, Should Retirees Sell Their Homes and Rent?' MarketWatch , Aug. 2023.
4. 'Should Seniors Sell Their Home and Rent?' The Jenn Smira Team , Jan. 2025.
5. 'The Downsizers Choosing to Rent Their Way Through Retirement.' The Times , Nov. 2023.
How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?
Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.
In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?
Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.
What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?
IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.
How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?
Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.
For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?
Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.
How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?
Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.
What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?
Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.
What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?
Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.
In terms of retirement preparedness, how does the pension plan at Verizon accommodate employees’ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?
Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.
How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?
Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.
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