Weak Home Sales Affect Retirement Plans

But Morse hasn't been able to take off on his grand tour because he hasn't been able to sell his house in Cerritos, Calif.

"I had hoped the house would sell almost immediately," said Morse, 68, who retired in April as a technician for FlightSafety International, an aviation training company. But his open house drew few visitors, and there have been no bids in the two months it has been for sale.

"Now I may have to take it off the market and wait until spring," he said. "It's frustrating, because I'd like to get on the road."

Morse is among thousands of Americans who can't take the next step in their lives because they can't sell their houses. Some are seniors trying to downsize for retirement, others are young couples trying to move up from their starter condominiums or growing families that need more space.

"A lot of people are finding it's taking longer to sell than they expected," said Stephen Piazza, vice president of Quicken Loans in Livonia, Mich.

A spike in defaults in mortgages made to people with poor credit has caused lenders to tighten their standards, making it harder for some would-be buyers to qualify for loans. At the same time, many potential buyers are hesitating, hoping that prices soften after the steep run-up in recent years.

The National Association of Realtors said earlier this week that sales of existing homes dropped for a fifth consecutive month in July and the number of unsold homes shot up to a record 4.59 million.

That doesn't mean there are no buyers, Piazza said. Still, an unexpected delay in selling a home -- especially following boom housing years that saw multiple bids within hours of a house going on the market -- can throw off an individual's plans.

Phillip Cook, a certified financial planner in Torrance, Calif., who has worked with Morse, said that anyone developing a financial plan has to consider that there are ups and downs to the economy, including the housing market.

"Real estate has its cycles just like everything else," he said. "After the kind of run-up we've had ... people think it won't slow down, won't go down. But it does."

That means families need to be flexible and not lock themselves into situations where they must sell at a specific time, potentially incurring losses that undercut their ability to live comfortably in the long run.

"The question is, if we're in the down part of the cycle, can we wait to get a reasonable offer?" Cook said. "Maybe we have to hang in there for several years until the market recovers."

If someone budgets carefully, he said, that person has options, as in: "What's the minimum I can take and still make my (financial) plan work. ... Maybe I won't be as comfortable, but I can live with it."

For Eileen Griffin, who is 55 and divorced, selling her five-bedroom home in Cheshire, Conn., is key to getting on with her life, especially since her youngest daughter left home for college this fall.

"I want to downsize, to buy a tiny house somewhere in Connecticut," said Griffin, who is a special education teacher. She's also purchasing a condominium in Myrtle Beach, S.C., which is where daughter Jennifer if going to college and where she hopes to retire in five years.

Her Connecticut home went on the market in April, and got some lookers but no offers. She relisted it in mid-August and has worked with a professional to "stage" the home to make it more appealing to potential buyers.

"Despite all that, I'm just not getting calls to see the house," Griffin said. "And it's difficult for me -- I'm living in a house that is staged for a potential buyer, so I can't leave anything out on the counters, the laundry basket has to be empty, things have to be in their place."

Griffin has thought about what she may have to do if she's stuck for a while with two mortgages, one on the Connecticut house and the other on the Myrtle Beach condo.

"Maybe I can rent the condo out to vacationers to help cover the mortgage, but still have it to use for parents weekend and other activities," she said.

But, she added: "Two mortgages over a long period of time would kill me. I'm hoping the big house sells."