A recent article published in the Ottawa Citizen and Financial Post (Saturday, December 26, 2009) by Jonathan Chevreau (Wealthy Boomer) discusses the fact that the decade we are about to complete will be the last decade many boomers will work as full time salaried employees.

The first wave of Baby Boomers born in the 1945/46 era will hit the traditional retirement age of 65 in 2010 and 2011 with the rest of the Boomers born in the 50’s reaching the traditional retirement age sometime before the end of 2020.  According to Canada’s Urban Futures Institute, 425,000 Canadians will retire each year by the time the end of 2020 appears.

The article references a BMO report that thinks the word “retirement” should be retired.  That report, issued by the BMO Retirement Institute in April 2009, found that the 2008 market crash caused Canadian Baby Boomers to revise their “retire by” plans.  A previous BMO study, from 3 years earlier, found most Canadian Boomers planned to work in some capacity after traditional retirement, with the top reasons being “to stay mentally active” and to “stay in touch with people”.  In the earlier study, money placed 3rd.  With the current report, money moved up to 1st as more than 80% of respondents cited the need to make money in retirement or semi-retirement.  Things have changed for those Canadians who aren’t lucky enough to have one of the gold plated defined benefit retirement plans at their disposal.

Boomers are entering a transition period – similar in nature to what Boomers have experienced if they underwent career changes during their full-time working life.  An opportunity to pursue other interests while you transition, which might provide Boomers with the opportunity to make some money on the side without the pressure of a demanding full-time salary job.

The article also points readers to a BMO online “transition calculator”.  You can find it by Googling “Retirement Your Way”.  The calculator will show the impact on savings if you work past the traditional age of 65 or if you opt to work part time during a multi-year transition period as you move from full time employment to full time leisure.  Sounds like a potentially useful tool.

Taking on part time project related work that could produce income in the $40K to $80K should be of interest to many Boomers who want to transition more slowly before getting into full-time leisure mode.  A interesting pursuit to me.

The author also goes on to say that semi-retired Boomers can accomplish a lot during this transition period and he is expecting many great things to appear.

We're continuing to post new US housing information to help Canadians who are planning to buy vacation homes in the US sun-belt.  The following is a summary of Standard&Poors (S&P) Case Shiller Index ending October, 2009.  For complete and detailed index report results, head to www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/

The Standard & Poor's/Case-Shiller home price index (covering 20 top US cities) released Tuesday (December 19) edged up 0.4 per cent to a seasonally adjusted reading of 145.36 in October from September. The index was off 7.3 per cent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters. The index is now up 3.4 per cent from its bottom in May, but still almost 30 per cent below its peak in April 2006.

For US sun-belt areas, prices in Las Vegas were down -.1%, Miami down -.4%, Tampa down -1.6%, Phoenix up +1.3% and San Diego up +.4% from September to October

“Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip,” David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement. That happened in the early 1980s, he said, and the current housing recovery appears more solid.

The federal government has stepped in with an extraordinary level of support this year for the housing market. Home price gains since the summer reflect the rush of home buyers trying to close their deals before the original expiration date of a federal tax credit. The Nov. 30 deadline was extended last month to April 30.

Besides a credit of up to $8,000 for first-time buyers, Congress expanded the program to include homeowners who have lived in their current properties for at least five years. They can now claim a tax credit of up to $6,500 if they relocate.

The Federal Reserve is also buying up $1.25-trillion in mortgage-backed securities to help keep interest rates at historical lows.

Canadians considering a purchase of that “home in the sun” have much to consider given the conflicting data coming from various sources.  Buried in all the information coming at us is something called “the shadow inventory” which are homes in the process of foreclosure and not yet counted as available for sale.  Also, we should be aware that although sales volumes of existing homes are climbing from month to month, they’re being sold at lower prices. Below is a summary of what Standard and Poors (S&P) have recently reported.

The economic downturn appears to be over, but Standard & Poors think the recovery will be sluggish. Most importantly, however, the housing market appears to have stabilized. Home prices across the US have risen for five consecutive months, according to the S&P/Case-Shiller index and the number of homes sold also continues to rise. Home sales hit a 14-month high in October, though there are worries that the first-time homebuyer credit may have disproportionately fueled the rise.  And although S&P expect home sales and prices to fall off after November with sales decline more than normal in December and the first quarter of 2010, the worst appears to be over. The extension of the tax credit and its expansion to other than first-time buyers ease fear that sales could drop sharply.

But home sales have to be matched against the properties that are still in the process of foreclosure and could swell the supply of homes on the market. The supply of homes for sale dropped for both new and existing homes by 15% and 37%, respectively, reducing the unsold supply to only 6.7 months for new houses and 7.0 months for existing  homes(close to the rule of thumb of six months). However, S&P believes there is a large shadow inventory of homes in the process of foreclosure and homes that are being held off the market because of the weak prices. This inventory will likely limit any improvement in home prices. The drop-off in sales should bring home prices down, both because of the weaker demand and the likely shift in mix. We expect prices to drop about 7% from their expected November peak in 2010, which will bring the S&P/Case-Shiller index down about 35% from its July 2006 peak.