Eagle: Beyond Downsizing — Small Homes That Harvest Rain and Generate Power

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300 Million Talons...
300 Million Talons…

Beyond Downsizing. How Baby Boomers Can Avoid a Failed Retirement

Here’s a little bit of a twist on some conventional analysis.

Let’s start with a trend.  The baby boomers are getting older.  Their kids have departed (most of them).  It’s time to downshift towards prepare for 20-30 years of “active retirement.”

How?  They need to get their ravaged finances in order, by cashing out of their biggest investment, their home.   And since this trend will be both huge and will occur very quickly, it’s going to have profound effects on the US housing market.   Specifically, three things:

  1. The market for bigger homes will decline sharply.  It’s important to not be the last one out before the prices soften or crump.
  2. The market for smaller homes for couples will improve markedly (there aren’t nearly enough homes in the current housing stock to support this shift).  Most of these will be in suburbs (boomers aren’t going back to the city).
  3. Many of these new purchases will be to nearby communities that are less expensive (reversing the trend that drove up prices in towns with great school systems — putting even more pressure on #1 above).

However, this downsizing won’t prove to be enough.   Modern “retirement” can be longer than many “working careers” and very few people have full featured pensions or the millions in retirement savings required to do this without ending up in poverty within a decade or two.   Further, even if you do, many will find that a volatile market and systemic fraud/theft (of the type that went unpunished in 2008) can crush a financial nest egg nearly overnight.

So, what can be done?  I don’t have a solution to financial volatility/busts.  Nobody in the financial world does either.  I do have an alternative idea.  Make the investment in an asset that supports you every day, from the moment you downsize.

Use the cash you get from the sale of the bigger home to buy/build a home that pays for itself as much as possible.  From producing electricity that can be sold back to the grid to generating income using the income bootstrap.  I’ll have more on this.  It’s important.

This is the one shot most baby boomers will have at avoiding an American Nightmare.