By 2029, 54% of Middle-Income Older Adults Will Not Be Able to Afford Senior Living

By 2029, there will be 14.4 million middle-income older adults in the United States, and 54% of them will lack the financial resources to pay for senior living at today’s average market rates. This presents a massive business opportunity but also a potential crisis for public health and government insurance programs.

These are among the key takeaways from landmark research conducted by a team from the National Investment Center for Seniors Housing & Care (NIC), NORC at the University of Chicago, Harvard Medical School and the University of Maryland School of Medicine. Their findings were officially released today at an event in Washington, D.C. and will be published in the May issue of the journal Health Affairs.

Private-pay senior housing providers are well aware of a vast, untapped middle market, but the new research quantifies the scope of this population and is meant to accelerate efforts to serve it.


There are a host of potential business strategies and public policies that could be steps in the right direction, but the situation may demand wholly new housing and care models — including both innovative operational and financing approaches.

The findings

While previous research has projected the future wealth of aging Americans, this is the first study to tie the expected housing and health care needs of seniors to their anticipated income levels, the researchers believe. The work is also notable because it examines seniors’ individual financial outlooks rather than household wealth, as is more common, NIC Chief Economist Beth Burnham Mace, an author on the study, noted to Senior Housing News.

The research team undertook a three-step process, using 2014 data from the Health and Retirement Study — a nationally representative, longitudinal study of people 50 and older, conducted by the University of Michigan and sponsored by the National Institute on Aging.


First, the researchers created an “individual financial resource measure” that included income, annuitized assets and annuitized housing equity. They then estimated the size and demographics of the U.S. senior population in 2029. Finally, they estimated the per-capita financial resources and selected health care criteria of that cohort.

These are among the key conclusions:

— The number of middle-income seniors will nearly double, from 7.9 million in 2014 to 14.4 million in 2029. Middle-income is defined as those people age 75-84 who have annuitized financial resources in the range of $25,001 to $74,298, and those aged 85 and older with annuitized resources of between $24,450 and $95,051.

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— As a proportion of the total population of U.S. seniors, the middle-income cohort will grow from 40% to 43% by 2029.

— About 60% of middle-income seniors will have mobility limitations and 20% will have high health care and functional needs.

— Taking $62,000 as the average projected cost of assisted living and out-of-pocket health care spending, annually, 54% of seniors will not have sufficient financial resources to pay for senior housing in 2029, even if they draw on their home equity.

— By 2029, 81% of middle-income seniors who do not have home equity will have annuitized assets of $60,000 or less.

These projections paint a clear picture, of a future in which there is a huge population of middle-income older adults who might benefit from and desire senior living but will not be able to afford it.

For the business community, the challenge is to create operational and financial models that can produce attractive margins and serve this population. If this is not accomplished, this middle-income population might spend down their financial resources until they become eligible for Medicaid, which covers long-term care. Therefore, the federal government and states face a tremendous and likely unsustainable drain on the Medicaid system unless they shape policies to support business initiatives and other efforts to create more housing and care options for aging middle-income boomers.

The ultimate solution or solutions may be surprising and come from an increased focus on the issue.

“Here’s my theory: I think about automobiles,” NIC’s Mace told SHN.

When the cost of automobiles became prohibitive, the leasing structure was invented, she said. A similar scenario might play out in senior housing, or so she hopes.

“I think when we put a spotlight on how large an opportunity this is, there will be entrepreneurs who sit back and say, what can we do with this?” Mace said.

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