This is the second post in an 8 part series on aging in America. In this post, I will explore the concept of “home” as individuals age. Before data diving, I want to share that one of the top two things I’ve heard from the 56 individuals I’ve interviewed is their strong desire and intention live independently forever, ideally in their current home. If that’s not possible, then a smaller and more age-appropriate home, but their domain nonetheless.
Here are the 7 lesson’s I’ve learned about housing:
#1: There are many housing options available, but have low uptake
Other can traditional home ownership or renting options, there are many housing options for aging individuals, each type differentiating on the cost/level-of-assistance/level-of-community dimensions from others.
I’ll pick out two to illustrate the spectrum.
- Continued Care Retirement Communities (CCRCs): This option offers clients aging-in-place. Residents start off by living independently in a house or apartment within the CCRC, with optional services like house-keeping. They make friends with neighbors and age together. As needs expand, clients get more assistance, eventually moving to a nursing home within the CCRC. This is one of the most expensive options, typically associated with a large upfront free (ranging from $250,000 to $1 million) and monthly charges ranging from $1000 – $10,000.
- Assisted Living: This option offers a semi-independent lifestyle to residents who need help with activities of daily living (bathing, dressing, medication management, transportation and meal services) and also have additional services available (housekeeping etc). The average cost is $3600 per month with variation based on quality and geography.
#2: Americans are aging in the homes they raised their kids in
While this pie chart looks different for the 65-75 age cohort and 75-85 cohort (with the latter representing higher shifts to assisted living and living in another family member’s home), these differences are small.
Other interesting facts to add color:
Households run by someone over 65 are on the rise relative to total household increase
#3: Health changes can make aging at home challenging
Despite the rise of chronic conditions like heart disease and diabetes, Americans are living healthier lives. Still, physical disabilities steadily increase. The most common disability among all aging sub segments is lack of mobility. This poses challenges in maintaining the house, cooking, cleaning and running errands etc.
There are two types of needs to consider:
- Health care – this includes medication, hospital bills, prescribed physical therapy, speech language pathology etc. Most of these expenses are paid for by Medicare and Medicaid, however there are gaps in coverage which are paid for out of pocket, or via supplementary insurance.
- Custodial/home care – this includes help with medication management, cooking, transportation, bill management etc. Most of these expenses are not covered my Medicare. Medicaid provides some coverage but is only available to individuals in poverty. Most of these expenses are paid for out of pocket, by an adult child or family member, or via long term insurance (however most individuals don’t have this coverage).
Single-individual households are most likely to need assistance and represent over 44% of the 65+ households.
#5: Financial liquidity and the desire to age at home can be at odds with each other
I’ll cover the complete financial picture of individuals over 65 in a subsequent post. Needless to say, there’s a massive need for home and health care, and a large portion of it must be paid for out of pocket. That’s where housing comes into focus.
Home equity represents a substantial percentage of the net wealth of individuals over 65. This trends downwards among wealthier individuals, who also have more dispensable income to spend on home care.
Reverse mortgages offer home owners federally backed loans such that they can free up the equity in their homes without needing to sell their home and move. However they have incredibly high premiums, insurance costs, complexity of terms, and recently have made the news for litigation, which means equity is not being unlocked effectively for most households who need it.
Moving to a smaller home is potentially the most efficient way to unlock equity to pay for home and health care, but is perceived to be difficult and overwhelming.
#7: Within challenges exist opportunities
Many of my friends in the technology industry spend time thinking about defying age and out-living death. While that’s intellectually interesting, there are real needs today that need to be met. Every need presents an opportunity, every opportunity welcomes creators to find new and elegant solutions. I’ll share my personal heat map of opportunities as I look at aging and home ownership.
I hope you learned something new and it piqued your interest. The next post will be on employment after 60.
Other posts on aging