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According to a new study, a whole group of retirees may not be able to provide housing for the elderly, such as assisted living or single-person housing, even after exploiting the current value of housing. their real estate capital.
While the majority of retirees prefer to age at home, the need for care or isolation can push seniors to other housing options. This is the challenge that many real estate developers have made in recent years to fuel the housing boom for seniors, especially for high-income seniors. Occupancy rates vary across the country, but they are relatively low as retirees tend to stay independent longer. This may change over the next decade, however, as today's oldest baby boomers reach the age of 80, when more care and services are often needed.
Demand could be higher by 2029, but about 54% of middle-income seniors should not have the financial resources to pay for their homes, even after using the proceeds from their existing homes, according to the findings published this year. week by the National Investment Center for Housing and Senior Care, a non-profit organization that follows the market. Researchers defined middle-income seniors as those aged 75 to 84 whose financial resources – social security, pensions, 401 (k) and other investments – with actuarial tables would yield approximately $ 25,000 to $ 75,000 per year. year or up to $ 95,051 for those 85 and over. These older people are generally too rich to qualify for resource-tested public programs such as Medicaid, but do not have enough flush to pay for their housing for an extended period.
This is a conservative projection, using the last average cost of $ 60,000 for seniors' housing in major markets, not to mention the services people may need for mobility, cognition or other problems over time. It also assumes that seniors will be able to sell their home at a price they want, which is not safe, especially since the Millennials have been slower to buy a home and to start a home. family. NIC researchers predict that by 2029, 81% of middle-income seniors will not have enough to pay for the average cost of housing for seniors.
Read our recent cover story: How your kids can ruin your retirement – and how to make sure they do not do it
This is a finding that echoes the caveat of other retirement experts that long-term care needs can affect retirement security. Demographics could make it difficult to find affordable housing for seniors. Today, many retirees rely on family members who provide unpaid care, but this may become less reliable in the future because of the shrinking family size and increasing numbers of people living there. single elderly. Health care needs could also push people toward seniors' housing in a decade when the oldest of today's baby boomers will turn 83 – at a time when care needs are rising. Researchers estimate that 60% of the 14.4 million middle-income seniors aged 75 or older will have mobility problems and that two-thirds will be affected. About 8% will have a cognitive impairment.
"We are trying to highlight the needs, not only in terms of policy but also opportunities for private investors," said Beth Mace, Chief Economist, NIC. Barron. "There is a great demand for people with housing and care needs."
The social aspect of senior housing may be more appealing to baby boomers, who have spent more time in dormitories than the previous cohort of retirees. Already, there is more experimentation on co-housing, with seniors sharing rooms with younger people who can help with care or other services around the house and a life together to the "Golden Girls".
As for investors, Mace, who has been working in real estate investment management for almost 20 years, says private equity is investing in housing for seniors. But the challenge now is to attract this investment into middle-income housing, possibly by leveraging socially responsible investments to structure different types of debt instruments that can drive down housing rents. to the elderly. Another option: tax incentives for developers and operators of older dwellings who develop middle income groups.
Write to Reshma Kapadia at [email protected]
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