In 2013, almost 40 percent of all households ages 55 and over had not paid off their mortgages, up from 32 percent in 2001. These borrowers were also carrying a lot more housing debt by 2013.
During that time span, the housing boom first encouraged homeowners to borrow against their newfound home equity. Then the 2008 bust hammered house prices from Miami to Seattle, reducing home equity and leaving many people holding relatively large mortgages.
By 2013, these two factors had combined to exacerbate Americans’ poor preparation for retirement, according to a study by the Center for Retirement Research, which supports this blog.
The researchers analyzed the impact of the bursting of the housing bubble on the National Retirement Risk Index (NRRI) through its effect on home equity, the largest store of non-pension wealth for most retirees. The baseline NRRI estimate, using 2013 data from the Federal Reserve’s Survey of Consumer Finances, was that 51.6 percent of working-age households were at risk of having a lower standard of living in retirement. Housing is part of the index, because retirees are assumed to convert their home equity into income by taking out a reverse mortgage.
The 2013 NRRI baseline was adjusted to see what would’ve happened if households had not run up their housing debt during the bubble and if house prices, rather than jump up and then plunge in 2008, had kept up their historic pace of increases since the 1980s. In that case, the researchers found, the share of households at risk would have been 44.2 percent – not 51.6 percent.
In other words, had the housing bubble and subsequent crash not occurred, fewer households would be at risk of having insufficient retirement income.
The middle-class was hardest hit by the crisis, probably because they’re more likely to own homes than people with low incomes and because housing wealth is more important to them than it is to wealthy people. …Learn More
Headlines about how much senior housing the aging baby boom generation is going to require often include the word “crisis.”
But it might be time to rethink our dire assumption that there won’t be enough housing for seniors, since boomers are living longer and are healthier than past generations and are changing what it means to grow old in this country.
One example is the U.S. nursing home population, which has remained fairly stable even though the elderly population is growing, according to a 2010 report by the Stanford Center on Longevity. The center cited better health as a key contributing factor.
Taking trends like these into account, a California real estate services firm has raised the age assumptions it uses to project increases in demand for senior housing, defined as facilities that include some level of care. The firm, Rockwood Pacific, still expects demand to increase over the next decade but at a slower rate. After that, when the oldest boomers are starting to turn 80, demand will continue to rise but also more slowly.
“When I started in this business in the 1990s, everyone talked about the 65-plus population” and its need for senior housing, said co-founder Frank Rockwood. “Now when you go to a senior housing conference, we talk about 75-plus. I’m saying now the time’s come we need to discuss 80-plus, rather than 75-plus.”
Doing so leads to big drops in the number of potential candidates for nursing homes, memory care units, and assisted living and independent living facilities, according to Rockwood’s estimates. (Residents in independent living communities share a central dining room and tend to be healthier than people the same age who reside in assisted living facilities, he said.)
Assuming people largely won’t need senior housing until at least 80, the firm lowered its forecast of demand growth over the next decade to about 2-3 percent annually, down from 3-4 percent under the 75-plus assumption. …Learn More
The stress of living with her son and daughter-in-law made Mary Roby’s blood sugar spike. But when she began her search for an independent senior housing community, affordable and nice never seemed to come in the same package.
Roby, who is 80, said she looked around quite a bit. A one-room place in the Boston area for $4,500 a month had no senior services, a limited kitchen, and was housed in a poorly maintained building. She also knew, through her son’s in-laws, about a high-end assisted living community with extensive services, but it charged more than $6,000.
Then she found Shillman House, which was both affordable and nice. “I love it here,” Roby said about the independent senior housing community in Framingham, Mass. …Learn More
After his wife of 36 years died from cancer, Dick St. Lawrence experienced something new: loneliness.
“Worst feeling in the world,” St. Lawrence, 81, said about Linda St. Lawrence’s death in the winter of 2014.
Like many widows and widowers before him, he had to build a new life for himself, despite having the comfort of a large family of four living children, six grandchildren and seven great-grandchildren. His first small step was accepting an invitation to play poker at Shillman House, an independent housing community for seniors owned and operated by Jewish Community Housing for the Elderly. The man who called to invite St. Lawrence knew a woman who used to play Mahjongg with Linda.
Next thing he knew, he’d sold their family home in Framingham, Mass., around the corner from Shillman House, and settled into one of its 150 apartments. Now he plays two poker games a week, works out at his old gym, and socializes with Shillman’s residents every evening in the dining room. At night, his Cairn terrier, Rusty, keeps him company during Red Sox games on television.
“I want to visit as long as I can,” Dick St. Lawrence jokes about his plan to spend his final days there.
The vast majority of baby boomers in an AARP survey said they want to age in their homes “as long as possible.” But when the rubber meets the road – in old age – the elderly often learn that isolation is bad for their psyche and their health.
There are downsides even to living in a community for independent seniors, with the constant reminders of the vulnerabilities that come with aging. When a Shillman resident suddenly becomes ill and is driven away in an ambulance, dread quickly spreads among the residents that he or she might not be coming back.
Still, they say, the positives far outweigh the negatives. All in their 80s, the seniors interviewed have visibly slowed down but are still enjoying vigorous social lives. …Learn More
In this video, Professor James Lubben, founding director of Boston College’s Institute on Aging, discusses numerous research studies showing that people who lack a social network of friends or family are more likely to neglect good health practices and to experience psychological distress, cognitive impairment, the common cold, and even death – “it’s on a par with smoking,” he said.
Seniors become particularly vulnerable to becoming isolated as they decline physically, but isolation then makes them more vulnerable to worsening health.
Social health should “be as important as mental health and as physical health,” said Lubben, who also is a professor of social work here at Boston College.
Summers are a fun and busy time – this video is a reminder that elderly family members and neighbors who aren’t very mobile might need some company or someone to check in on them. Learn More
When a spouse or parent requires long-term care, quality is the top priority. But a report last year by the US Government Accountability Office (GAO) cited concerns about the quality of the federal data essential for monitoring the quality of care. For example, three key indicators point to improvements: better nursing staff levels and clinical quality and fewer deficiencies in care that harm residents. Yet consumer complaints jumped 21 percent between 2005 and 2014, even though the number of nursing home beds has remained roughly flat in recent years.
Anthony Chicotel, an attorney with the San Francisco non-profit California Advocates for Nursing Home Reform, said care quality is intertwined with affordability, payment sources, and dramatic changes under way in nursing home economics. For his views on this important topic, Squared Away interviewed Chicotel, who is also part of a national coalition of attorneys advocating for patient rights.
Question: RecentBoston Globe articles have highlighted substandard care at nursing home companies that allegedly sacrificed resident care quality for profits. Are these a few bad actors or is this a larger problem?
Problems exist in the traditional buyer-seller marketplace for nursing homes and long-term care services. Providers all get paid pretty much the same rate regardless of whether the care they provide is good or bad. It’s usually the government who’s paying, and they’ve got an imperfect monitoring system to make sure the rules are followed.
The bottom line is that dollars can be extracted from a for-profit facility that don’t go into patient care. What you sometimes see is a nursing home affiliated with a number of other companies that provide services to the nursing home at above-market rates. The same web of companies running the nursing home might be in charge of the linen supplies, medical equipment, therapy, and the above-market rents for the facilities. If they’re paying, say, $12,000 a month for linens instead of sending it to a non-affiliated company, and it costs only $7,000 per month to supply the linens, they’re making a $5,000 profit. I don’t think the government’s going to catch that or account for that money.
Q: Long-term care is so expensive – more than $6,000 per month, on average. What are the top three financial issues that face nursing home patients and families? … Learn More
Maria Machado estimates that women over 50 make up about three out of four of the Dallasites seeking to cut their living expenses either by renting out a room in their home or by renting from a homeowner.
Shared housing often isn’t their first choice. “We like our independence,” said Machado, head of the Shared Housing Center, a non-profit roommate matching service in Dallas. But “house rich and money poor” older women will turn to house-sharing when they become widowed or if Social Security is their sole source of retirement income, she said. Companionship is another benefit of match-ups, whether with another senior or a younger adult.
The Shared Housing Center is part of a national network of programs matching up homeowners with responsible, low-income adult renters. In another form of house-sharing, two or a group of people will pool their resources to buy a house and share the mortgage, upkeep costs, and taxes.
The network created a website, the National Shared Housing Resource Center, that lists agencies in 23 states providing these services. Many major cities (though not Atlanta or Detroit) have agencies, and several states have more than one (California has a dozen). Many programs in the network conduct background checks, the website says.
To find a house-sharing program in your city, click here. To read about “success stories,” click here and here.
Jamie Hopkins predicted “the Golden Girls scenario” will become more common as baby boomers age, and he recommended it as an option in his new book, “Retirement Risks: How to Plan Around Uncertainty for a Successful Retirement.”
Homeowners “say, ‘I’m going to live here as long as I can, and that’s my plan.’ But if people want to age in place, you’ve got to come up with a way to generate income from this asset.” …Learn More