MONEY home prices

The World’s 10 Most Expensive Houses—and Who Owns Them

Feast your eyes on some of the priciest homes on the planet.

The owners of the world’s most luxurious houses can be a mysterious bunch. We all know who owns Buckingham Palace, but does anyone recognize the name Tim Blixseth? Or know the Indian billionaire who built a 27-story apartment building just for himself? We’re guessing not.

Well, the mystery ends here. Using information provided by CompareCamp.com, we’ve got a rundown of the world’s 10 most expensive houses—modern castles, really—and the people lucky enough, and rich enough, to own them.

 

  • 7 Upper Phillimore Gardens

    Location: London
    Value: $128 million
    Details: This 10-bedroom prep school turned mansion has an underground swimming pool, a sauna, gym, cinema, and even a panic room. That’s all in addition to an interior covered in marble, gold, and priceless artworks.
    Owner: Olena Pinchuk—daughter of Leonid Kuchma, Ukraine’s second president. She is known for being the founder of the ANTIAIDS Foundation and a friend of Elton John.

  • Kensington Palace Gardens

    Location: London
    Value: $140 million
    Details: Located on London’s Billionaires Row, the already tricked-out pad will soon add an underground extension with a tennis court, health center, and auto museum.
    Owner: Roman Abramovich—a Russian billionaire and owner of the private investment firm Millhouse LLC. He’s probably best known in the West as the owner of the English Premier League’s Chelsea Football Club.

  • Seven The Pinnacle

    Yellowstone Club near Big Sky, Montana.
    Erik Petersen—AP Photo/Bozeman Daily Chronicle

    Location: Big Sky, Montana
    Value: $155 million
    Details: The largest property in the Yellowstone Club, a private ski and golf community for the mega-rich, the house has heated floors, multiple pools, a gym, a wine cellar, and even its own ski lift.
    Owners: Edra and Tim Blixseth—Real estate developer and timber baron Tim Blixseth cofounded the Yellowstone Club, but the club’s bankruptcy, a divorce, and other troubles have seriously reduced his wealth in recent years.

  • Hearst Castle

    Indoor Pool at Hearst Castle, designed in style of Roman baths.
    Doug Steakley—Getty Images/Lonely Planet Images

    Location: San Simeon, California
    Value: $191 million
    Details: The 27-bedroom castle, used in the movie The Godfather, has hosted John and Jackie Kennedy, Clark Gable, Winston Churchill, and other famous figures.
    Owners: William Randolph Hearst’s trustees—The castle, built by the country’s first newspaper magnate, is now a heritage and tourist site and part of the California Park System.

  • Ellison Estate

    Location: Woodside, California
    Value: $200 million
    Details: Less a house than a compound, this 23-acre property is home to 10 buildings, a man-man lake, koi pond, tea house, and bath house.
    Owner: Larry Ellison—Co-founder of Oracle and the third-richest man in the world in 2013, according to Forbes.

  • 18-19 Kensington Palace Gardens

    Location: London
    Value: $222 million
    Details: Another property on Billionaires Row, 18-19 sits alongside the home of Prince William and Kate Middleton. This particular residence has 12 bedrooms, Turkish baths, an indoor pool, and parking for 20 cars.
    Owner: Lakshmi Mittal—The head of Arcelor Mittal, the world’s largest steel manufacturer, and, according to Forbes, one of the 100 richest men in India.

  • Four Fairfield Pond

    Location: Sagaponack, New York
    Value: $248.5 million
    Details: This 29-bedroom home sits on 63 acres and has its own power plant. Inside, there are 39 bathrooms, a basketball court, bowling alley, squash courts, tennis courts, three swimming pools, and a 91-foot long dining room.
    Owner: Ira Rennert—Owner the Renco Group, a holding company with investments in auto manufacturing and smelting. He also has holdings in metals and mining.

     

  • Villa Leopolda

    Villefranche-sur-Mer, south-eastern France, the villa of Leopolda, property of the widow of businessman Edmond Safra, Lilly Safra.
    Eric Estrade—AFP/Getty Images

    Location: Cote D’Azure, France
    Value: $750 million
    Details: This 50-acre estate includes “a commercial sized green house, a swimming pool and pool house, an outdoor kitchen, helipad, and a guest house larger than the mansions of most millionaires,” according to Variety. The house was famously used as a set in the 1955 Hitchcock classic To Catch a Thief.
    Owner: Lily Safra—A Brazilian philanthropist and widow of Lebanese banker William Safra. Her husband died when another one of the couple’s homes burned down, apparently due to arson.

  • Antilia

    India, Maharashtra, Mumbai, Kemp's Corner, Antilia aka the Ambani building on Altamont Road.
    Alex Robinson/AWL Images Ltd.—Getty Images

    Location: Mumbai, India
    Value: $1 billion
    Details: The Antilia isn’t even really a home in the traditional sense. This 27-story, 400,000-square-foot building has six underground parking floors, three helicopter pads, and requires a 600-person staff just to maintain it.
    Owner: Mukesh Ambani—India’s richest man, with a net worth of $23.6 billion, according to Forbes. Ambani made his money running Reliance Industries, an energy and materials company.

  • Buckingham Palace

    Buckingham Palace
    FCL Photography—Alamy

    Location: London
    Value: $1.55 billion
    Details: Technically still a house, but certainly not for sale, the Queen’s residence was valued at roughly $1.5 billion by the Nationwide Building Society in 2012. The property holds 775 rooms, including 19 state rooms, 52 bedrooms, 188 staff rooms, 92 offices, and 78 bathrooms.
    Owner: The British Sovereign—Currently Queen Elizabeth II, who has ruled since February 6, 1952.

    See CompareCamp.com’s full graphic, including more images of these home, here

    Read next: 4 Things Millionaires Have in Common, Backed by Research

MONEY Millennials

What Everyone Gets Wrong About Millennials and Home Buying

Millennials on porch in suburbia
Katherine Wolkoff—Trunk Archive

Conventional wisdom says that millennials are a new and different generation. But when it comes to housing, they're likely to be more conservative and traditional than their parents were.

If you’ve come across any stories mentioning millennials and home ownership, you’ve likely heard this refrain: Young people just aren’t very interested in buying a house. Instead, the story goes, they want to rent a cool apartment, live in a city, and walk to coffee shops. Forever.

This narrative was eloquently expressed in a recent New York Times article about a hip, 30-year-old, unmarried couple choosing to rent in a swanky Virginia high-rise. What made these millennials pick a rental apartment over a nest of their very own? The developer of the couple’s new home, Joshua Solomon, had his theories:

“That generation of folks has seen people really get hurt by homeownership,” said Mr. Solomon, president of the company, which is based in Waltham, Mass. “The petal has really fallen off the rose as it pertains to homeownership. People don’t want to be tied down to a mortgage they can’t get out of quickly.”

Sounds like a reasonable conclusion, right? Multi-unit construction is up, after all, and first-time home buyers are in historically short supply.

But if you dig a little deeper, both Solomon’s generalization and the “millennials don’t really want to own homes” trope turn out to be largely untrue. A number of surveys have shown that the vast majority of millennials would love to own a place of their own. Recent research from housing site Zillow, for example, found that adults age 22 to 34 are actually more eager to own a home than older Americans.

According to Zillow’s data, young married couples in which both partners work (represented by the orange line in the left graph below) currently own homes at a rate close to or above historical norms for their demographic. Even single employed millennials (the yellow line in the right graph) are slightly more likely to own a home than their counterparts in the ’70s, ’80s, and ’90s.

Zillow

So if young adults want homes more than previous generations, why is their homeownership rate at a historic low? The answer is that millennials are getting married later in life, and not having two income streams makes it much harder to scratch together a down payment.

From 1960 to 2011, Americans’ median age at the time of their first marriage increased by six years, to around 29 from 23 for men and 26 from 20 for women, according to Census data. Then came the financial crisis, which pushed marriage back even further by making financial stability—a marital prerequisite for many— a rarity among recent college graduates. According to one recent study from the University of Arizona, only about half of adults ages 23 to 26 and at least one year out of college have a full-time job.

As a result, the millennial generation’s overall home purchases are down—but they probably won’t be down forever. Zillow’s analysis shows that if millennials were marrying at the same pace as previous generations, their rate of homeownership would be 33%, four percentage points higher than now and roughly the same as in the 1990s. Once this generation begins to tie the knot, the evidence suggests, it’ll be buying homes at least as frequently as older Americans once did.

Old School Values

In fact, there’s some evidence that home ownership is more important to millennials than it is to Gen Xers or boomers. In a recent survey, forty-six percent of respondents ages 18 to 34 told Zillow they believe “owning a home is necessary to being a respected member of society,” and 65% said “owning a home is necessary to live The Good Life and The American Dream.” Both results were higher (in most cases, significantly higher) than older age groups.

America’s newest generation—post-millennials—are perhaps the most old-fashioned of all. A shocking 97% of teens age 13 to 17 believe they will one day own a home, and 82% say homeownership is the most important part of the American dream. If anything, buying a home seems to be getting more attractive, not less.

So millennials really want a home, but they still want a cool home, right? One that’s urban, and different, and close to a Blue Bottle Coffee? Maybe when they’re still young and single, but a large amount of evidence suggests that even today’s young adults look to the suburbs once children come along. Highly dense “core cities” like San Francisco and New York are attractive to millennials looking for fun and adventure, but they’re also extremely expensive to live in when dependents enter the picture.

Research suggests a negative correlation between big cities and child populations. City Journal found that between 2000 and 2010, the population of children 14 and younger fell by 500,000 in the country’s densest urban areas, including Los Angeles, Chicago, and New York. As children disappeared from cities, the nation’s 51 largest metro areas lost 15% of adults 25 to 34—the same age range when many begin to marry and start families. “While it’s not possible to determine where they went,” the Journal noted, “suburbs saw an average 14 percent gain in that population during the same period.”

Mollie Carmichael, principal at John Burns Real Estate Consulting, is already seeing millennials flee cities to more child-friendly environments. “We do find that the millennials want to be in urban areas, but usually when they’re not married and they’re renting” says Carmichael. “But the trigger is marriage, and then frankly they want more traditional areas and more traditional environments than even their parents. They want suburban; they want single-family detached; they want a yard.”

What about millennials’ much-reported fixation on urban-ness? There’s some truth to it, Carmichael acknowledges, but “urban to them means they want the ability to walk to the park and walk to the Starbucks. It’s more about accessibility, and that could be driving to those great places they want to go.”

In the end, America’s newest adult generation isn’t that different from the previous ones. Millennials may Instagram their new home instead of sending photos through the mail, but not much else has changed.

MONEY

S.F. vs. K.C. By the Numbers: How the World Series Teams and Towns Match Up

The World Series championship will be determined by how Wednesday night's Game 7 plays out, but how do San Francisco and Kansas City match up off the ball field?

After the Kansas City Royals stomped the San Francisco Giants in Game 6 of the World Series, the stage is set for an exciting winner-takes-all Game 7. The Royals, who skipped through earlier rounds of the 2014 playoffs without a loss, were named as a slight favorite to win the championship when the World Series began, and the Royals’ run is all the more impressive because the Giants’ payroll is more than 50% higher ($148 million versus the Royals’ $91 million).

For that matter, San Francisco blows away its opponent in terms of global cachet and higher incomes, and the home markets of this year’s World Series contenders couldn’t be more different. San Francisco is a hip, high-powered, and high-priced magnet for tech startups where the average home sells for close to $1 million, compared to a mere $186,000 for the typical house in Kansas City, a low-key, highly livable Midwestern hub famed for top-notch barbecue. Nonetheless, the secondary market price of World Series tickets for Kansas City home games has been roughly 30% higher than games hosted by San Francisco. That somewhat unexpected disparity likely comes as a result of San Francisco owning the edge on most recent World Series title. Giants fans have been spoiled of late with championships in 2010 and 2012, whereas Royals’ fans have been waiting since 1985 for another World Series title.

With the Series wrapping up tonight, click through the gallery above for a look at how the competitors match up, on and off the field.

MONEY homeowners insurance

Why You Soon May Have to Pick Up More Home Repair Costs

measuring tape with money
Bart Sadowski—Getty Images

Insurers are moving from flat deductibles to higher ones based on the value of your home. Here's what you need to know about this change.

Two years after Superstorm Sandy, State Farm agent Jen Dunn is busy explaining new insurance math to her customers in upstate New York. Instead of the dollar-amount deductibles they have been used to for years, she is now writing their policies based on percentages.

For many, it means turning the typical $500 deductible into 1% of the insured value—for a $250,000 house, that means a gasp-producing $2,500.

“My clients who have been offered this initially say, ‘I don’t like this,'” Dunn says. But then she explains that the higher amount is usually offset by a lower annual premium. If they go years without a claim, they can save in the meantime.

Jason Corbett, 39, who lives in central Georgia, is using a 1% deductible. Because Corbett’s rural home is valued at slightly less than $200,000, it was a better deal than a flat $1,000 deductible. The difference between the two deductibles was only a couple of hundred dollars. However, he saved money by lowering his premium, so over time the difference in his out-of-pocket costs will be negligible.

If he had a $300,000 home and the deductible was double what he pays now, “that would be a different decision,” says Corbett, who writes a personal finance blog.

State Farm, the largest U.S. property and casualty insurance company by market share, says a “significant” number of its policies now have percentage deductibles. Other carriers, like Allstate Corp, USAA, and Nationwide, also offer the option to consumers in certain states, but the prevalence is not yet tracked nationwide. The practice is near-universal in Texas at this point, according to that state’s insurance office.

With a percentage deductible policy, things are a little different than the old-fashioned flat rate. Here are seven things you need to know:

1. Do not be afraid of high deductibles

You might be used to $500, but a higher deductible could actually be better for you.

“It’s a very smart move to buy high deductibles if you can afford it,” advises J. Robert Hunter, director of insurance for the Consumer Federation of America.

The main reason? Every claim you make against your homeowners insurance can raise your rates. One claim pushes it up an average of 9% and two claims will raise it by 20%, according to a recent study by insuranceQuotes.com. So you want to pay out of pocket for small claims anyway.

2. The 1% deductible is not a percentage of your loss

The new terminology makes people think of health insurance, but homeowner claims do not work that way, says Jim Gavin, director of insurance information services for the Independent Insurance Agents of Texas trade group.

Rather, the out-of-pocket deductible you have to pay before the company will cover any claims is based on a percentage of the insured value of your home—which is not the market value or the appraised value, but the cost of replacing your home should it burn to the ground and need to be rebuilt.

For example: If a kitchen fire damaged your $250,000 home with a 1% deductible, and it cost $5,000 to repair the damage, you would receive a check from the insurance company for $2,500 after paying the other half yourself.

3. Your out-of-pocket costs will regularly increase

Your $500 deductible stays flat forever, but a percentage deductible will go up incrementally over time as the insured value of your home rises.

Some homeowners may not even notice this, like Will Harvey, 34, of Tyler, Texas, who is five years into a 1% policy on his home. “If it went up, it wasn’t enough for me to remember it,” he says.

4. You will still have other deductibles on top of the basic rate

Many homeowners have add-on clauses like a 5% hurricane deductible that is common in coastal areas, or 2% for wind and hail damage. Many states require separate coverage for earthquakes and floods.

Those all still apply on top of the basic coverage for fire and theft, says Amy Danise, editorial director of Insure.com. So if you have any damage that is caused by a specified risk, you will have to pay out of pocket first for that.

5. Your might be able to pay down your percentile

If 1% is too much for you, you may have the option to accept a higher premium to lower out-of-pocket costs—going from 1% to half a percent or some other fraction. The value to you depends on how much your house is worth and how much you can afford to pay out of your savings if something goes wrong, says State Farm’s Dunn.

6. You can still shop around

Even in Texas, where almost every company offers a deductible of at least 1%, or sometimes up to 1.5% or 2%, some carriers still do things the traditional way. Texas insurance agent Criss Sudduth says the customers who might benefit more from a flat-fee policy are those whose premiums do not actually go down despite the percentage policy—either because the weather risks are too high or because their personal credit is bad.

7. You should still figure out your dollar amount

After years of hearing complaints from consumers who are confused, the Texas legislature passed a bill recently requiring carriers to explain what the percentage deductible translates into, in dollars.

In other states, if your carrier does not do this, you should find out the information yourself and write it on your declarations page, says Deeia Beck, public counsel and executive director of the Texas Office of Public Insurance Counsel.

MONEY buying a home

Why Firemen Are More Likely to Own a Home than Economists

Firefighters
Many public service workers such as firemen own their homes. Michael Dwyer—Alamy

A new study shows which professions are most- and least- likely to be homeowners. The results may surprise you.

What do firemen, police officers, and farmers have in common? They’re all more likely to own homes today than economists, jewelers, and accountants.

These are the results from a newly released study, done by Ancestry.com, looking at the relationship between profession and home ownership today and over time. The website teamed up with the University of Minnesota Population Center to analyze Census data between 1900 and 2012, creating a century-spanning log to show how ownership changed over the decades.

Looking at the most recent 2012 data, the research found that 79% of policemen and detectives own a home, yet only 64% of economists do. Farmers (81%) and firemen (84%) are in the top ten professions most likely to own a house, ranked above jobs like accountants (76%), and far higher than members of the armed forces (33%). Nationwide, the data shows 64% of the population owns their home.

Another surprising finding: the stereotype of the starving artist isn’t necessarily reflected in the data—at least for some industries. It turns out 63% percent of artists and art teachers own homes, as well as 62% of musicians and music teachers, 63% of authors, and 57% of entertainers. It’s not all roses for the artistic class, though. Just 37% of actors and actresses own a house, and that number sinks to 23% for dancers and dance teachers.

Toddy Godfrey, a senior executive at Ancestry.com, points out that there are both high and lower income professions on the most-likely-to own list, suggesting there isn’t a direct relationship between high wages and ownership. Typically lucrative professions like optometry tend to own, but so do lower-paid trade and public service workers.

“You look at some of the jobs on the top of the list, and they’re clientele based, or teachers, or others who are community rooted,” says Godfrey. He speculates that professions most likely to own “have a long-term connection to the community they live in.” That reasoning may also explain why tradesmen tend to buy instead of rent. Godfrey guesses many of these workers are tied to regional manufacturing, and therefore are more likely to set down roots.

Another trend the data suggests is that temporary and highly mobile workers tend to avoid homeownership. That could explain why so few military service members own houses, as they can be redeployed elsewhere and may choose to move once their service ends.

Finally, Godfrey highlights the fact that while ownership took a hit in the bust, the majority of Americans own their home. That’s up from 32% in 1900, though most of the growth happened pre-1960. “Maybe it’s come down a point in the last few years, but it’s held pretty steady at two thirds,” says Godfrey.That trend has been pretty constant.”

Top 10 Professions for Home Ownership in 2012

1. Optometrists: 90%

2. Toolmakers and Die Makers/Setters: 88%

3. Dentists: 87%

4. Power Station Operators: 87%

5. Forgemen and Hammermen: 84%

6. Inspectors: 84%

7. Firemen: 84%

8. Locomotive Engineers: 84%

9. Airplane Pilots and Navigators: 83%

10. Farmers: 81%

Bottom 10 Professions for Home Ownership in 2012

1. Dancers and Dance Teachers: 23%

2. Motion Picture Projectionists: 27%

3. Waiters and Waitresses: 27%

4. Counter and Fountain Workers: 28%

5. Members of the Armed Forces: 33%

6. Service Workers (except private households): 34%

7. Bartenders: 35%

8. Housekeepers and Cleaners: 35%

9. Cashiers: 36%

10. Cooks (except private households): 36%

MONEY buying a home

How to Get Ready to Buy a Home

Checking your credit report and getting pre-approved for a mortgage are key, says Century 21 CEO Rick Davidson.

MONEY buying a home

The Surprising Feature Millennials Insist on When Buying a Home

Century 21 CEO Richard Davidson explains what young, single home buyers value in a new house.

MONEY retirement planning

Why Housing Costs Are the Biggest Threat to Your Retirement

House on top of cash
Caroline Purser—Getty Images

We should be looking at smaller "starter" homes as our "stay put" homes.

If there is one thing we have been trained to fear about retirement, it’s crippling medical bills that threaten to force us out of our homes and decimate our nest eggs. But it turns out that we might be better off worrying about our future housing expenses, as these costs are the single largest category of spending in retirement.

Moreover, the costs of maintaining a home remain stubbornly high as we age, according to a new analysis by the Employee Benefit Research Institute. For those 75 and older, housing expenses accounted for a whopping 43% of spending, even as other expenditures (except for health care) dropped.

Time was that retirees were supposed pay down their mortgages or drastically downsize their homes before retirement. But that behavior has changed, perhaps as a result of the refinancing boom or the housing crash—or both. According to the Consumer Finance Protection Bureau, more people are carrying mortgage debt into their retirement years, up from 22% in 2001 to 30% in 2011.

Even as the rate of homeownership has remained stable, the median amount owed on mortgages for people aged 75 and older increased 82% during that same decade, from $43,000 to $79,000. Delinquency in paying mortgages and foreclosures also greatly increased for seniors from 2007 to 2011.

The lesson in all this is that while financing one’s home can be hugely beneficial, mortgages can grow into significant burdens when you’re living on a fixed income. The time to stretch yourself financially on a home is not when you’ve already left the workforce and have no way to make more money.

It’s not just larger mortgages that saddle retirees—it’s everything that comes with homeownership, including property taxes, homeowner’s insurance, home repairs, housecleaning, gardening and yard services. At the same time, transportation, entertainment and travel expenses all tend to decline as a natural course of retirement.

It seems that people have an easier time forgoing vacations and restaurant dining than they do square footage and lawns, which is understandable. The comforts of home can bring great stability during a time of transition. But as we struggle to figure out how much money we will need in retirement, we might need to consider how to defray the expense of these patterns.

For those in mid-career, now is the time to get control of our mortgage costs. As a recent study by Pew Charitable Trusts shows, Gen X has lower wealth than their parents did at their age, in large part because they hold nearly six times more debt, including student loans, unpaid medical bills and credit card balances. And that’s despite having generally higher family incomes than their parents did.

Given these headwinds, we may want to rethink the American way of constantly trading up to larger houses through our 40s and 50s. The more we grow accustomed to more luxurious living, the harder it will be to downsize when it makes sense. Perhaps instead of looking at smaller houses merely as “starter homes,” we should be looking at them as “stay put” homes instead.

Millennials face a different challenge. After taking longer to get started in their careers, they will end up buying houses later in life, which means they risk carrying significant mortgages into retirement. They would benefit from not biting off more than they can chew—putting more cash down than the minimum, not buying more house then they can really afford, and making sure to max out out their 401(k)s or IRAs. Home equity can be an excellent investment, but only if it enhances rather than jeopardizes financial security—now and in the future.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

MONEY real estate

The High Cost of Failing to Refinance

Many homeowners have missed out on big savings by not refinancing, new research finds. Here's why.

Until recently, I’d never seen a mortgage rate south of 6%. Of course I’d heard that rates had dropped to almost half that, and yet, for a variety of reasons, I did not take advantage of them by refinancing my existing mortgage. Though illogical, my inertia is not uncommon. According to a recent paper by researchers at the University of Chicago and Brigham Young Unversity, the “failure to refinance” strikes approximately 20% of homeowners who could greatly benefit from the lower interest rate environment.

The costs of this failure can be sizeable over time. Say you had a 30-year fixed-rate mortgage of $200,000 at an interest rate of 6.5%. If you refinanced at 4.5 % (approximately the decrease between 2008 and 2010), you would save over $80,000 in interest payments over the life of the loan, even after accounting for refinancing transaction costs. If you had refinanced in late 2012, when rates hit an all-time low of 3.35%, you would save $130,000 over the life of the loan.

Failing to refinance isn’t completely irrational. Refinancing is a difficult transaction requiring extensive paper work, an appraisal and hefty fees. All of which triggers what the researchers call “present bias,” a psychological phenomenon that makes it harder for people to make decisions that may have upfront costs but longer-term benefits.

My own story illustrates the way that present bias impacts behavior. When I bought my current home in 2007, my rate on a 30-year fixed mortgage was 6.625%. As rates began to drop, I was never entirely clear how to calculate at what point refinancing would make sense financially. At the same time, I was receiving mail offers promising to save me money merely by increasing the number of mortgage payments a year. That made me wary of being taken advantage of by lenders looking to make money in transaction costs off of unsuspecting buyers. (This wariness has also always made me distrustful of any loans with “points.”)

By 2011, however, rates had clearly fallen enough to justify a refinance. But by that point I was considering moving, and I didn’t want to go through all the paperwork and hassle if I was going to be selling soon anyway. Then, like many others, I found that my house’s assessed value had fallen sharply from my purchase price. Given the weak real estate market at the time, it made more sense to stay put. Even though I knew that refinancing would still benefit me, the uncertainty about my future brought about by market forces only delayed my decision more.

Finally, in 2013, I refinanced. I wound up borrowing more as part of another financial transaction, but at an interest rate of 3.46%, my monthly payments are almost the same as they were before. I have since heard of wise colleagues who, instead of lowering their monthly payments, refinanced from a 30-year mortgage to a 15-year mortgage and as a result will own their homes outright in half the time while making about the same payments.

Which, if you think about it, means that they overcame “present bias” twice: first in the act of refinancing, and then by forgoing having extra cash on hand to spend now in order to be debt-free in 15 years. At the end of the day, refinancing isn’t just about saving money; it’s about what you do with that money that can make a huge difference to your long-term financial security.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

MONEY housing

How the Financial Crisis Put Up Two More Barriers to a Secure Retirement

Two new studies underline housing and income challenges facing older Americans.

Monday marks the sixth anniversary of the bankruptcy filing of Lehman Brothers, a key event in the Wall Street meltdown that led to the Great Recession. The recession wreaked havoc on the retirement plans of millions of Americans, and two studies released last week suggest that most of us haven’t recovered well.

To be more precise: Middle- and lower-income Americans haven’t recovered at all, while the wealthiest households have done fine.

The Joint Center for Housing Studies of Harvard University (JCHS) issued its findings on the challenges we face meeting the housing needs of an aging population in the years ahead. Meanwhile, the Federal Reserve Board released its triennial Survey of Consumer Finances (SCF), a highly regarded resource for understanding American households’ finances.

The Harvard study found that our existing housing stock is ill-suited to meet seniors’ needs, including affordability, accessibility, social connectivity and support services. And high housing costs are eating into the ability of low-income older adults to pay for necessities like food and healthcare.

Housing is the largest expenditure in most household budgets, and so is a linchpin of financial security and well-being. “It’s really at the nexus of your financial health, physical health and healthcare,” says Jennifer Molinsky, research associate at the JCHS and principal author of the study.

Harvard found that a third of adults over age 50 pay more than 30% of their income for housing—including 37% of people over age 80. Harvard defines that group as “housing cost burdened.” Another group of “severely burdened” older Americans spend more than 50% of income on housing. That group spends 43% less on food, and 59% less on healthcare, compared with households that can afford their housing.

Homeowners are much less likely to be cost-burdened than renters, the study found. But more homeowners are carrying mortgages well into retirement. More than 70% of homeowners aged 50 to 64 were still paying off mortgages in 2010.

The Federal Reserve findings on middle-class retirement prospects are equally troubling. Despite the economy’s gradual mending, the SCF found a widening gap in income and net worth. The top 10% of households was the only income band registering rising income (up 2% since 2010). Households between the 40th and 90th percentiles of income saw little change in average real incomes from 2010 to 2013. And the rate of homeownership was 65%, down from 69% in 2004 and 67% in 2010.

Ownership of retirement plan accounts also fell sharply. In the bottom half of income distribution, just 40% of households owned any type of account—IRA, 401(k) or traditional pension—in 2013, down from 48% in the 2007 survey. The Fed attributes the drop mainly to declining IRA and 401(k) coverage, since defined benefit coverage remained flat. Meanwhile, coverage in the top half of income distribution was much higher. In the top 10%, 95% of families are covered.

Overall, the average value of retirement accounts jumped a substantial 10% from 2010 to 2013, to $201,300. The Fed attributed that to the strong stock market and larger contributions. But for the lowest-income group that owned accounts, the average combined IRA and 401(k) value was just $39,100—and that is down more than 20% from 2007.

Considering the stock market’s strong performance in the intervening years, that suggests many of these households either sold while the market was depressed, drew down savings—or both. Meanwhile, upper-middle-income households saw a gain of 20% since 2007.

In Washington, lobbyists and policymakers have been debating about whether a retirement crisis really is looming. The various sides typically filter the data to support their viewpoints and agendas. But it’s difficult to think of two sources aligned than the Federal Reserve Board and Harvard. The SCF, in particular, is widely viewed as a gold standard survey that will be relied on for many economic reports in the months ahead. It includes information on the household balance sheets, pensions, income and demographic characteristics of about 6,500 families.

The JCHS study was funded by the AARP Foundation and The Hartford insurance company, so there’s a possible agenda there, if you doubt Harvard’s independence as researchers. (I don’t.)

Taken together, the studies paint the portrait of a widening divide in the retirement prospects of working Americans. No matter how the data is sliced, we’ve got problems that need to be addressed.

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