Seniors May Face A Grim Financial Future

More than half of middle-income seniors 75 years or older won't have enough money to cover assisted living rent and other out-of-pocket medical costs a decade from now, even if they were to sell their homes and use all other financial resources.

That number will sharply rise to 81% if tomorrow's seniors choose to keep their home but commit the rest of their annual financial resources to cover the nearly $62,000 annual cost associated with senior housing and supportive personal care services.

That's according to a new study published this month in Health Affairs by the National Investment Center for Seniors Housing and Care at the University of Chicago.

The researchers used demographic and income data to forecast estimates for those who will be 75 or older in 2029, with a focus on those who earn between $25,000 to $75,298 per year.

The rising costs of housing and health care will nearly double in 10 years, growing from $7.9 million to $14.4 million by 2029, researchers found.

At 43%, middle-income seniors will make up the biggest share of that age group.

But by that time, they will have annual financial resources of $60,000 or less, even including the equity of their homes.

Compared to the projected $62,000 annual assisted living and medical expenses cost in the next decade, the majority of middle-income seniors will not be able to afford an assisted living facility.

Middle-income seniors are a group that Caroline Pearson, the study's lead author, said has often been overlooked when policymakers, legislators and the private sector think about housing and care for aging Americans.

"We have built a robust public program over long-term care service for low-income and a private market for wealthy and higher-income people. The problem is that everybody else doesn't have a good set of options," said Pearson. "I certainly hope this is a wake-up call to policymakers, real estate operators and investors."

Researchers also projected that 60% of middle-income seniors will have mobility limitations, while 20% will have three or more chronic conditions and a more restrictions in activities of daily living, such as dressing or bathing; 8% will have some form of cognitive impairment.

These seniors are more likely to need care and support such as that offered by an assisted living facility.

Other issues to consider are making homes more accessible by adding ramps for wheelchairs, wider doorways or grab bars in the shower and the high cost of these renovations.

The study warned that while spouses and middle-age daughters have historically provided the bulk of senior care, it is becoming less of an option because of changing marriage patterns, lower birth rates and the increasing number of adult children who live far from their parents.

The study suggests that policymakers could expand Medicare benefits to include access to a wider range of supportive services, or create a new benefit, "Medicare Part E," that funds long-term care.

However, other attempts to set up such a program have run into resistance among lawmakers because of cost.

While Medicaid is the primary payer of long-term nursing home care, right now the program is available only to low-income seniors.

Seniors may become eligible if they impoverish themselves, Pearson said.

But lawmakers could also broaden the Medicaid income eligibility requirements or expand options to include home-based care for those with higher-end incomes.

From the private-sector perspective, researchers suggested lowering investment return expectations by charging less rent and reducing profit margins.

Another option might be to subsidize lower-income residents with higher-paying residents, as seen in many mixed-income communities. Researchers also suggested offering more basic and less expensive housing service products, and more formally involve family caregivers or outside volunteers as a way to offset staffing costs.

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