Creating less costly options—quickly—could help more seniors get the housing and supportive care they’ll need
ANNAPOLIS, Md.—Fewer than half (46%) of America’s middle-income seniors will be able to afford the $60,000 average annual costs of seniors housing and out-of-pocket medical costs in 2029, new research shows. But if the costs were cut, millions of older adults could benefit.
Independent research conducted by NORC at the University of Chicago shows that an additional 5.9 million older adults would be able to afford seniors housing if annual costs were cut by $15,000. Data show that if average annual costs for seniors housing and care fell by just $10,000 a year, an additional 2.3 million older Americans would be able to afford it.
“Today’s housing stock simply cannot accommodate the influx of middle-income seniors projected to need seniors housing and care within 10 years,” said Beth Burnham Mace, chief economist at the National Investment Center for Seniors Housing and Care (NIC), which supported the study. “Making seniors housing accessible to more middle-income seniors in the next decade requires innovation by real estate developers, owners, operators and investors to create and deliver affordable, quality options.”
Currently, seniors housing in the United States is generally paid out-of-pocket by those with ample assets, with a relatively small percentage of Americans having long-term care insurance to defray the costs. In order to afford long-term care, researchers say many middle-income seniors may be forced to rapidly spend-down their assets to levels where they qualify for Medicaid to cover their care. For seniors with very low incomes, Medicaid covers housing only in skilled nursing facilities, and sometimes covers long-term services and supports provided in homes, often by family caregivers.
“The doubling of middle-income seniors in America over the next decade presents challenges to the Medicaid system and potential opportunities to the private sector,” said Caroline Pearson, lead researcher of the study at NORC at the University of Chicago. “If the sector can develop products that appeal to middle-market consumers at a price they can afford, it will greatly expand the potential market for seniors housing and increase options for these previously underserved seniors.”
Researchers defined middle-income as people who are 75 and older with annual financial resources of roughly $25,000–$95,000.
Researchers say the private sector can pursue strategies such as offering more basic housing products; better leveraging technology; subsidizing ‘middle-market’ residents with higher-paying residents; developing new pools of investors and capital providers; adapting existing properties, like malls, for new uses; more robustly engaging unpaid caregivers; developing innovative real estate financing models; and other options.
They also say that the public and private sectors could work together to develop financing or housing options so that more middle-income consumers can access seniors housing.
Whatever the solution, experts say it needs to happen quickly. According to NIC, it would take 17 years at today’s construction rate to build the 750,000 additional seniors housing units needed to serve the middle-income market. Researchers say older adults a decade from now will also face more challenges with mobility, manage more chronic conditions, and experience significant cognitive impairment.
To learn more about the study, please visit natinvcenterdv.wpengine.com/middlemarket.
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EDITOR’S NOTE:
NIC is hosting an investment summit to present the research on Tuesday, May 21 (9 am–noon) at the Yale Club in New York City. NIC and NORC will release an interactive tool to explore alternative costs of seniors housing and its impact on the number of seniors served.
To request a press pass for the summit, contact Gwendolyn Tom at 202-868-4831, GTom@MessagePartnersPR.com.
About the National Investment Center for Seniors Housing & Care
The National Investment Center for Seniors Housing & Care (NIC) is a 501(c)3 organization established in 1991 whose mission is to enable access and choice by providing data, analytics, and connections that bring together investors and providers in independent living, assisted living, memory care, skilled nursing and post-acute care. Through its industry leading annual conferences, NIC MAP® Data Service, research, analytics and sector outreach, NIC serves as an indispensable resource for the seniors housing and care sector. For more information, visit natinvcenterdv.wpengine.com and follow NIC on Twitter.