What’s Your Motivation for Renovation?
Making a house feel like home, but missing future mobility and health needs.
The desire to live in a nice comfortable house is the same regardless of age. Boomers and Millennials alike are renovating to make their house feel like home but at a different price – and sacrifice.
Boomers (age 65+) are updating “dated” rooms, especially their kitchens and bathrooms and making their homes more attractive according to a study by The Hartford and the USC Davis School of Gerontology. Houzz, a home remodeling and design company, also found 56 percent of 60+ households plan to stay in their homes indefinitely and are installing raised toilets and grab bars to make their kitchens and toilets more accessible as they get up there in age.
For Millennials – 25 to 34 year olds – the key motivation for renovation is to make a newly purchased home their own according to the Houzz study.
“While still a small group, Millennial homeowners are just as active as older generations when it comes to renovating and decorating,” Nino Sitchinava, principal economist at Houzz says. “Because of delayed homeownership, we have historically known very little about their preferences when it comes to their home updates. However our unprecedented data show that Millennial views on resale value, energy efficiency, healthy homes, and other factors are similar to those of older generations.”
Regardless of the reasons for remodeling, money is needed. The costs of these projects can often run thousands of dollars, and Boomers are the big spenders on this one – dropping an average of $45,200 on major remodels of a large kitchen and $38,700 on a small kitchen while Millennials spent around $26,300 on major remodels of a large kitchen (more than 201 square feet), and $16,100 of a small kitchen (less than 201 square feet).
How are they footing the bill?
Impressively, “all generations leveraged savings or personal finances to pay for their home upgrades”, the Houzz study says. As they renovate, they’re also thinking of cost saving measures in the long run by installing automation systems that can be helpful for cutting energy costs around the home. Twenty-five percent of homeowners surveyed thinks smart home tech is a ‘very-to-extremely important’ consideration for recent renovations.
Sadly, the good news stops here.
Unfortunately both Boomers and Millennials are going over-budget, and using credit cards to make up the difference. Unsurprisingly, more Millennials turned to their credit cards even though their renovation price tag was less than the older generations. Thirty-two percent of Millennials charged renovation expenses versus 25 percent for other generations.
Even more troubling – one in five homeowners rate addressing and preventing health concerns during renovations as ‘entirely unimportant’ according to Houzz. This coincides with the Hartford and USC finding that 40 percent of Boomers expect to remodel their home in the future, neglecting to take their health and aging into consideration now.
Considering the high cost of healthcare in retirement, this is especially disconcerting. Those who have already retired often attest to the high cost of healthcare in retirement, citing it as one of their biggest surprises in retirement.
An article by MainStreet that cites data from multiple sources says “the recurring health care costs for Medicare beneficiaries average $1,885 a year. Fidelity Investments concluded that a couple retiring at 65 would need $220,000 for medical expenses. A retiree would pay more than $3,000 a year in premiums and deductibles for Medicare Part A, B and D” the AARP calculated.”
“People are living longer – at least 20 years in retirement according to the data – so it isn’t surprising that healthcare in retirement add up,” Consolidated Credit’s president Gary Herman says. “While Millennials may have a little more time than Boomers to prepare for retirement, Boomers should be making sure their financial house is also in order. As you inch towards retirement you should be thinking of getting rid of debt, not racking it up. So for Boomers to be taking on credit card debt for home renovation represents a risk to their financial stability.”
There is no denying that renovations to make a house a home or get it ready for your retirement are essential. Still, it is also important that those on the cusp of retirement aspire to not let retirement catch them paying down debt. If this is your story dial to speak to a certified credit counselor or request help now through our online portal. You may also check out these how-to retirement savings tips and tools to help you reach your goals.