Senior Housing Will Be Too Pricey for 54% of Mid-Income Older Adults by 2029

By 2029, nearly 8 million middle-income older Americans won’t be able to afford senior housing at today’s average market rates, new research shows. While the statistics have negative implications for the senior housing industry, they create opportunities for home-based care providers, whose services are often the least expensive option for seniors.

The findings come 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 research, which was released Wednesday, will be published in the May issue of the journal Health Affairs.

Unlike previous studies of this kind, this research is the first to connect expected housing and health care needs of seniors to their anticipated income levels, contributing researchers say, looking at seniors’ individual financial outlooks rather than household wealth.


The researchers define middle-income seniors as those who can’t afford current senior housing prices but are unlikely to qualify for Medicaid. That includes seniors between 75 and 85 with annuitized resources of $25,001 to $74,298, as well as those 85 and up with annuitized resources of $24,450 to $95,051.

“Our results show a large and growing cohort of middle-income seniors will have a gap between their housing and care needs and the financial resources to meet those needs, given today’s seniors housing options,” the researchers wrote. “As the opportunities to serve this growing cohort becomes more recognized, we expect creative entrepreneurs to pursue other yet-to-be-imagined solutions.”

Among researchers’ key findings:


— The number of middle-income seniors in the U.S. is set to nearly double by 2029, jumping to 14.4 million from 7.9 million in 2014.

— The proportion of middle-income seniors making up the total population of seniors nationwide is projected to grow from 40% to 43% in the next 10 years.

— Of those seniors, about 60% will have limited mobility, while 20% will have high health care and functional needs.

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

— By 2029, 81% of middle-income seniors without any home equity will have annuitized assets of $60,000 or less.

Home-based care opportunities

Home-based care, which is about half the price of nursing home care, is one obvious alternative to certain types of senior housing.

Seniors can expect to pay $8,365 per month to rent a private room in a nursing home, but non-medical home care costs an average of $4,004 per month for seniors whose caregivers work 44 hours per week, according to the latest Genworth 2018 Cost of Care survey.

While the average monthly cost of $4,000 associated with assisted living facilities is technically less expensive than hiring a full-time in-home caregiver, many seniors do not require 44 hours of care per week, making the monthly cost of home care even less expensive.

Additionally, home care services could become even cheaper in the years to come, as the Centers for Medicare & Medicaid Services recently announced it’s expanding the supplemental benefits allowed under Medicare Advantage (MA) plans in 2020 and beyond.

The new rules open the door for a number of non-medical, in-home services, giving MA plans permission to cover benefits that “have a reasonable expectation of improving or maintaining the health or overall function” for beneficiaries with chronic conditions.

Medical home health care is a similarly inexpensive option, coming in at $4,195 per month for seniors whose caregivers work 44 hours per week, according to Genworth’s survey.

Least expensive alternative

While home-based care is far less expensive than many types of senior housing, many industry leaders worry the price point for home-based care services is too high for the growing population of middle-income seniors.

One such person is former Addus HomeCare Corporation (Nasdaq: ADUS) CEO Mark Heaney, who is looking to create a multisite, multidisciplinary system of community care services through a new private equity partnership. He says adult day care — where one caregiver oversees several seniors — will be vital to the system he’s building and the future landscape of senior care in general.

“We think that personal care — one-to-one care — is vital, but we believe that one-to-one care is becoming increasingly expensive, and we think the solution over the long term is group care,” Heaney previously told Home Health Care News. “Group care will often be adult day services.”

Adult day care costs an average of $1,560 per month, according to Genworth.

Hoping to capitalize on the opportunities presented by adult day services, Baltimore-based in-home care franchiser Senior Helpers launched its own adult day care franchising model called Town Square in 2018.

Less than one year after Senior Helpers opened its first Town Square franchise location in the San Diego area, business is booming, CEO Peter Ross previously told HHCN.

“We now have a location that’s being completed in Baltimore. We have a new franchisee that will be opening later this year in Louisville, [Kentucky]. We have a franchise candidate that’s buying 10 [Town Squares] in Chicago [to open] over the next 5 to 10 years,” Ross said. “We also have two other candidates, one in New Jersey and one in California, that are ready to sign and move forward.”

Additional reporting by Tim Mullaney

Companies featured in this article:

, , , , , , ,