According to a new research study, by 2029 the majority of middle-class U.S. seniors will not be able to afford assisted living programs.
The problem derives from the fact that the number of middle-class seniors will explode in the next decade. While today there are around 8 million middle-class people 75 years old or older, in 2029 this number will increase to about 14 million. More than 50% of these 14 million will not be able to afford either the costs of an assisted living facility or at-home personal care.
Caroline Pearson is a senior vice president for health care at the National Opinion Research Center (NORC), which is an independent social research organization that is part of the University of Chicago. She was the lead researcher of the study, and she says that most middle-class seniors simply will not have sufficient resources to pay for private senior housing, at least as it is known today.
Cheryl Fish-Parcham, who is the director of access initiatives at a consumer health care advocacy organization called Families USA, insists that — while it may seem easy to blame seniors for not having saved enough money for their retirements — the reality of the situation is far more complex. She says that income largely determines how much money people can save. This means that, even if a person has saved in their IRA the maximum allowable amount, they still would not be able to afford assisted living care if their income was not sufficient and if they did not have a large number of assets.
Robert Kramer is a strategic advisor for the National Investment Center for Seniors Housing and Care and is the founder of the organization, which helped finance the research study. He says that these middle-class seniors will not only be unable to afford assisted living facilities but that their incomes will also be too high for them to qualify for government support programs.
Pearson says that those who have been developing private housing options for seniors have been focusing on high-end properties for wealthy individuals. As such, the rents charged at these facilities are very high. At the same time, those who have low means can receive Medicaid, which provides poor elderly people with both long-term care services and nursing home facilities.
However, those who fall in between the two extremes are likely to be left out, because no one at the moment is developing solutions for them. Because of this,
Kramer says that these middle-class people will likely have no other option but to expend most of their savings so that they can qualify for Medicaid. He further says that this will be an unpleasant proposition for many middle-class seniors, who will become understandably depressed at the thought of being forced into poverty.
If many middle-class seniors are forced into poverty and onto Medicaid, it could have wider implications as well. Pearson believes that this could lead to a large drain on Medicaid, and it could cause the cost of the program to skyrocket.
The research study was published in the May edition of Health Affairs. In it, the researchers first estimated how much money seniors will have available to them in the next decade, and then they compared this to the assisted living options that will most likely be available to them during this same period of time.
They concluded that, in 10 years from now, more than 50% of middle-class seniors will be unable to pay more than $60,000 per year for both assisted living facilities and any uncovered medical expenses that they may encounter. This is true even if these people focused their entire savings on this and sold all their valuable assets, such as their homes.
Even more dire is the situation for those who decide to keep their homes. More than 80% of these middle-class people will be unable to afford assisted living care, even if they used all their life savings toward it.
What’s more, the inability to pay for assisted living care will come in conjunction with a slew of other problems many of these same seniors will likely face. This includes impaired physical and psychological states as well as other medical issues. Also, many of these people will not be able to rely on the help of family members like seniors in the past have been able to do. This is because this group of seniors has had fewer children and these children are more likely to live far away from them.
All this does not mean that there are no possible solutions for these people. Fish-Parcham, for example, believes that Medicare could be adapted to help seniors stay in their own homes longer than previous seniors could have done. This could include not only the use of at-home caregivers but also helping with the cost of home maintenance and home improvements. At the moment, though, Medicare only covers at-home care if a patient cannot leave their home at all.
Another option could be developing private senior housing projects for middle-income people. Pearson believes that there is a big opportunity out there for such developments to succeed.