Living in a small home can be dangerous, for seniors in particular. When I lived in a sub-400-square-foot apartment, basic tasks required Cirque du Soleil-like acrobatics. Pulling out the salad bowl meant hoisting myself on top of the garbage can while holding on to a water pipe, stepping onto the lip of the kitchen sink, and grabbing the bowl with one hand while clutching onto a ceiling overhang with the other—all while avoiding the pots hanging perilously close to my head. Then I’d leap onto the kitchen tile, salad bowl in hand.
To store luggage after traveling, I had to simultaneously jump on the bed and hurl my suitcase onto a makeshift shelf above the door. When I didn’t throw it hard enough, I had to leap out of the way to avoid being smashed as it fell back down.
“Why not buy a ladder?” I imagine you asking. There was nowhere to put it.
No older person should have to perform acrobatics just to live day to day. However, they were a reasonable trade-off for a young, single person who needed a place to live in Manhattan on a budget. Like many of my Gotham compatriots, I lived in a tiny home out of necessity, and I set it up like a yacht cabin: only one, high-quality version of any item. Everything had a place, and everything was in its place—even if I had to climb to get it.
Personal Living Space Has Nearly Doubled in the Last 40 Years
Outside of pricey cities like New York and San Francisco, living in cramped quarters is not the norm. From 1973 to 2013 the average size of a new home in the US skyrocketed from 1,660 square feet to 2,679. That’s a 61.4% increase, as shown in the chart below.
Meanwhile, the size of the average US household has dropped from 3.01 persons to 2.54 persons. That translates into to an average 91.2% per person increase, or 1,054.7 square feet per person, up from 551.5.
(Source: American Enterprise Institute)
The spike in house size shouldn’t surprise you. Frankly, before I jumped into this topic, I assumed most new houses were even bigger.
A bit of international perspective is in order: the average house size in New Zealand is 2,112 square feet; Canada, 1,950 sq. ft.; Japan, 1,420 sq. ft. So, although US homes are generally larger, they’re not entirely out of step with houses in other developed countries.
Have new homes simply become cheaper, allowing the size jump without significant added costs for homebuyers? Not particularly. As economist Dr. Mark Perry recently noted in an article for the American Enterprise Institute, “On a per square foot basis using median home prices and median square footage, the inflation-adjusted price of new homes has been relatively stable since 1973 in a range between about $105 and $125 per square foot.”
Plus, even if new homes had become cheaper to build and buy on a square footage basis, more space still requires more furniture and gadgets and more upkeep, which all cost more money.
That said, unless you’re an ardent conservationist, larger homes aren’t a problem per se. There are a slew of reasons having more personal living space is good, including lower rates of communicable diseases and more places to retreat to when your son is playing the drums or your spouse is doing this or that annoying thing (which no one has linked to lower rates of heart disease, to my knowledge, but I wouldn’t be surprised).
On the other hand, stubborn debts and high housing costs are real problems for anyone serious about funding a carefree retirement.
The gap between how much Americans need to save for retirement and how much they actually have saved is wide—giant, gaping abyss wide. Last year Ameriprise Financial reported that Americans on average have a $250,000 gap between the amount they’ve saved for retirement and the big bucks necessary to sustain a comfortable retirement.
Though it’s a good start, cutting your cappuccino intake won’t magically make $250,000 appear. So, where can a middle-class family find that sort of money? Steven Harrell found a way.
A Tiny, Radical Solution to a Soul-Crushing Problem
2008 was the year Harrell got out of debt. He was determined to stay that way. In his late 20s at the time, around the age many people sign up for 30 years or so of mortgage debt, Harrell built a tiny house and opted out of a lifetime of indentured servitude to a large home.
Now in his mid 30s and mortgage-free, Harrell is one of a handful of tiny house pioneers. His website, Tiny House Listings, which he runs from a 90 sq. ft. office in North Carolina, provides resources for people building their own tiny homes. For those outside of the do-it-yourself camp, Harrell’s site also lists tiny homes for sale across the country.
Just how tiny is “tiny?” Tumbleweed Tiny House Company sells building plans in the 117-874 square-feet range. The smallest are “houses to go” built on wheels, which it sells premade for $57,000 and up. If you cringe at the thought of a trailer, that’s not quite what these are. The Elm model pictured below actually looks quite pleasant in a cool, mountain air sort of way.
The Elm, 117 square feet (Source: Tumbleweed Tiny House Company)
Tumbleweed also offers plans for slightly larger cottages built on permanent foundations, like the Whidbey cottage, which Lyndsey and Tom Lewis customized to build their 600 sq. ft. Little Rock, Arkansas home shown below.
Custom Whidbey Cottage, 600 sq. ft. (Source: At Home Arkansas)
Harrell and the Lewises are part of a growing trend. After traveling for the better part of a decade, Christopher Smith was nearing age 30 and ready for a home of his own. He bought 5 acres in the Colorado mountains and set out to build his own tiny house from scratch while documenting the process for the 2013 film TINY: A Story About Living Small. Smith’s story mirrors that of other tiny housers (as they call themselves). He wanted freedom from a pricey mortgage, freedom from costly home maintenance, and freedom from needing to buy lots of stuff to furnish a large space.
Sure, these people might sound a bit fringe. Many of them are radically off the grid. Nevertheless, the reason most cite for choosing a tiny house isn’t fringe at all. They want financial freedom, and they’re making radical lifestyle changes to ensure they have it.
Of course, you can lower your housing cost some without moving into a 300 sq. ft. tiny house. Architect Sarah Susanka published Not So Big House in 1998 to show people how to get more from smaller, higher quality homes; it’s sold over 1 million copies since. Susanka designs energy-efficient homes, which she describes as “right-sized for the way we really live.” Her latest model is a 1,600 sq. ft., “not so big bungalow”—just about the right size for empty nesters.
One Way to Build a $250,000 Bridge
The money to bridge a $250,000 retirement gap has to come from somewhere. Otherwise, more and more of the 10,000 baby boomers who retire every day will end up unable to do what they’d wanted with their time, dependent on family or living exclusively off Social Security… or simply disillusioned. For some, a much smaller home could be the answer.
Tiny houses are not the solution for everyone’s money woes. After all, homebuilders built larger and larger homes for smaller and smaller families over the last 40 years because that’s what most people wanted to buy. Then again, others think devoting 25-30% of the after-tax income of their dual-income household to a mortgage, paying to maintain and furnish a sizable home, cutting hefty checks for property taxes, and then expecting to somehow find enough money for retirement is lunacy. It’s helpful to know that these people have options.
On that note, options for investing well and living a rich retirement no matter how big or small your house or your retirement portfolio might be is what our monthly newsletter, Miller’s Money Forever, is all about. The latest addition to our portfolio is poised to profit from the real estate demands of an aging population, and I’m eager to share it with you.
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On the Lighter Side
If a tiny house isn’t for you, consider one made of chocolate.
Dennis will be back at the helm next week.