Few Can Afford to Age in Place These Days
Remember that the happiest people are not those getting more, but those giving more. – H. Jackson Brown
Few Can Afford to Age in Place These Days... What Can Be Done?
The data is in and reveals that Increasingly older Americans are struggling to cover their housing expenses as the cost of everyday goods and services is 20% higher than it was in 2019. While the pace of inflation has slowed the new cost of living is further eroding the ability of older adults to age in place.
In a recent MarketWatch column, Jessica Hall writes,
“Most older adults can’t afford to juggle the costs of housing and long-term care. In addition to long-term-care costs, housing costs also often place a burden on older adults. In 2021, an all-time high of nearly 11.2 million older adults were “cost-burdened,” meaning they spent more than 30% of their income on housing, according to the Joint Center for Housing Studies”.
So how many older Americans can afford the services and care needed to age in place?
Not many.
Samara Scheckler, a research associate at Harvard University’s Joint Center for Housing Studies notes, “When the cost of care is added to housing costs, only 14% of single people 75 and older can afford a daily visit from a paid caregiver, and just 13% can afford to move to assisted living, Scheckler said. The median cost of assisted living is $4,500 a month, according to Genworth. “People want to live in their home for independence, but they still need resources, assistance, and support to stay within those four walls,” Scheckler said. “Even the fit of the home is important: Does it have laundry on the main floor? A bathroom? Both parts – care and housing suitability – need to be in place. But it’s often out of economic reach for many.”
A perfect storm is brewing as the financial stress of care and housing costs converge as the population of older adults is growing. The U.S. population aged 65 and older increased by 34% in just the last decade, reaching 58 million in 2022. In the coming decade, the fastest growth will occur among people over 80, according to the Harvard Center.
The burden of housing costs is compounded by the increasing percentage of older adults who still carry a mortgage. Some 41% of homeowners aged 65 to 79 had a mortgage in 2022, compared with 24% in 1989. More than 30% of homeowners age 80 and over are also carrying mortgages, up from just 3% three decades ago, according to the Harvard Center. “With a mortgage, the older adult is burdened with debt in later life at a time when their income may be constrained”, said Scheckler.
In conclusion, fewer older Americans can afford to age in place further elevating the importance of the ability for these homeowners to access their home equity in a way that doesn’t increase their monthly obligations and further constrain their monthly cash flow.
