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Buying a house is considered one of life's biggest investments, providing shelter at the same time as your housing costs -- in the form of monthly mortgage payments -- bring you closer to owning your home, free and clear.

For baby boomers, it seems, homeownership is a real boon. Recent research shows that owning their own home can give Americans 50 years of age and older a measure of financial stability and security that peers who rent simply can't match.

The renting vs. homeownership gap
The notion that owning the home in which you live can be less costly than renting isn't new, but the housing crisis stretched the shelter costs gap between the two scenarios even wider.

The Population Reference Bureau noted that, in 1999, owners' housing costs equaled 22% of income, while renters' was nearly 40%. Both groups saw increases between 2007 and 2011, with slight decreases as of 2012. That year, owners' shelter costs settled at just 27.4% of income, while renters' costs soared to over 50%.

As Americans age, this situation becomes more dire. According to recent research from the Joint Center for Housing Studies of Harvard University, owning your own home outright after age 50 can literally mean the difference between spending your golden years in comfort or poverty.

Housing costs bite harder as people age
The center's Housing America's Older Adults study notes that one-third of boomers aged 50-plus pay more than 30% of income on shelter costs, with half of renters and mortgage holders aged 65 and older burdened in this way. For 23% of boomers with mortgages and 30% of renters, housing costs top 50% of income. This causes a crisis in which older boomers must divert money from other needs, such as food and medical care, to pay those monthly housing costs. 

For homeowners, particularly those no longer paying a mortgage, the situation brightens considerably. In the 50 to 64 age group, less than 15% are moderately to severely cost burdened, with the first cohort spending 30% to 50% of income on housing and the second spending more than 50%.

Compare that 15% cost-burden level to that of renters of the same age – nearly 50% of whom are paying such weighty shelter costs – and the benefits of owning a home become crystal clear. Even 50- to 64-year-olds with outstanding mortgages fare better than those who rent, with a little over 30% experiencing the type of cost burden renters face. 

For aging boomers, housing issues loom large
Housing affordability matters more for baby boomers, for several reasons. First and foremost, income generally drops as people age, creating a situation in which shelter costs can quickly take a much bigger chunk of boomers' income than they did when they were younger. A couple aged 50 to 64 years can see their income drop from over $80,000 annually to a little over $50,000 between ages 65 to 79. 

Health problems increasingly surface as people age, as well, and homeowners are in a better position than renters to cover those costs. While the typical renter aged 65 and older is unable to afford a full month of nursing home care, a similarly aged homeowner can usually afford up to 42 months of such care. 

Unfortunately, younger boomers face a troubled housing outlook, thanks in large part to the financial crisis. While the crash did not affect homeowners aged 65 to 79 much at all, the 50 to 64 age group saw homeownership rates drop from approximately 80% in 2005 to about 75% as of 2013.

This means that many more boomers will enter their retirement years with much higher shelter costs and much less financial security. For those who doubt the value of homeownership as an investment in the future, this study proves that a long-term investment in your own home is a resource that you can count on to reinforce the financial safety net well into your golden years.

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