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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 72 August 2024 J O U R N A L nimble and informed in the face of con- tinued economic headwinds, ensuring the plan they have in place continues to position them for a secure retirement." Proper Preparation Nationwide found that in order to account for financial headwinds, retirees are bolstering their plans, as 63% of the retired investors polled have a strategy in place to protect their assets against market risk, up from 54% last summer. However, these retirement plans look radically different from the plans of generations past. Some retirees (12%) are abandoning the 70%-80% spending rule (i.e., ensuring they have 70-80% of their pre-retirement income per year in retirement) and 11% are casting aside the 4% rule (i.e., withdrawing 4% of their re- tirement portfolio each year when retired). Retired investors are also initiating conversations about legacy planning and wealth transfer with their heirs. Nearly one-third (32%) of retirees are discussing wishes for end of life (long-term care expenses, funeral preferences, etc.), and 34% are discussing financial details of their estate with heirs. Advisors are supplying their clients with the guidance needed to help achieve financial security in retirement, counseling their retired clients on how to generate guaranteed income (23%), prioritizing wants vs. needs (21%), and supplementing income out of necessity (16%). Advisors are also helping investors plan for lingering financial commit- ments, such as mortgage repayments, which more than a third (34%) of advisors say their clients are planning to continue paying in retirement. With the Great Wealth Transfer underway, advisors are helping clients— and their heirs—prepare. More than half (59%) of advisors say their clients are confirming beneficiary designations to prepare their heirs for the transfer and management of wealth. Another 54% say their clients are reviewing or creating estate planning documents, and 44% are building financial confidence and knowledge. "Advisors are recognizing and acknowledging investors' desire to avoid making the wrong moves in retirement," Morrone said. "They can help clients feel more confident about their retirement plans by understanding their goals and anxieties and helping them protect their savings and plan for income they won't outlive by reinforcing the value of differ- ent retirement solutions and products, like annuities." The Price of Payoffs? A recent article from Bankrate examined the topic of mortgage payoffs, focusing on the benefits of paying off your mortgage early, such as gaining peace of mind and other considerations for an early mortgage payoff. The Bank- rate study asked: » Will other investments beat paying off a mortgage early? » Will all your cash be tied up in the mortgage? » How will you use the money if you don't pay off your mortgage early? » How much do you value peace of mind? Bankrate stressed that if paid off your mortgage early, to ensure that you are productive with the extra funds by putting that money to good use and earn better returns by: » Investing in the stock market to in- crease earning potential. » Increasing retirement savings by mak- ing higher contributions. » Funding education by contributing to an education savings plan. » Building (or adding to) an emergency fund. » Paying off high-interest credit cards, personal loans, or student loan debt to save on interest. RENTAL COMPETI- TION TIGHTENS AS MORE MULTIFAM- ILY INVENTORY HITS THE MARKET A ccording to a new Redfin study, less than half—roughly 47%— of newly built apartments that were finished in Q4 were rented within three months. This is the lowest season- ally adjusted percentage ever recorded, excluding Q1 of 2020 when the pan- demic's start completely shut down the housing market. It was 60% a year earlier. Because there are so many new apart- ments available, building owners are in competition with one another to attract tenants, which is causing the rental peri- od for existing flats to extend. The fourth quarter saw the completion of 90,260 new units, which is the second-highest total in records going back to 2012. The greatest amount was recorded in Q2 of 2023. The rental vacancy rate has been steady at 6.6% over the last three quar- ters. Though it's important to note that the vacancy rate is no longer rising as it was during the epidemic, that is the highest level since 2021. Apartment developers have put a stop to the number of projects they are initiating; multifamily building starts are below their 10-year historical average. However, because so many construction projects were started during the pan- demic moving frenzy and are only now coming to an end, completions are still close to their record high. Small Units See the Largest Rent Drops The most recent quarter for which Redfin has asking rent data broken down by number of bedrooms was the first quarter, when the median asking rent for newly constructed studio apartments decreased by 20.9% year over year. In the meantime, there was a 1.2% decrease in new two-bedroom apartments and an 11.9% loss in new one-bedroom flats.