Boomers at 80: Housing Issues to Grow

The baby boom generation is continuing to work its way up the age ladder. The number of Americans over 80 will more than double to nearly 18 million over the next two decades.

And that’s partly because baby boomers are healthier and are living longer – they are also enjoying more of their retirement years free of disability than previous generations.  But unfortunately, boomers can’t avoid the inevitability of their growing vulnerabilities and the impact this will have on their day-to-day lives. A new report by Harvard’s Joint Center for Housing Studies makes some sobering predictions about the issues the oldest retirees can expect to face in the future, from widening income inequality to more people living alone and in isolation.

The findings, taken together, point to a range of potential trouble spots revolving around housing our aging population.

• As people get old, their spouses die, their bank accounts dwindle, and their rents keep rising. For these and other reasons, housing creates more of a cost burden at 80 than at 65. The Harvard housing center defines someone as cost-burdened if they spend more than 30 percent of their income on housing. Today, nearly 60 percent of households over 80 fit this definition, and their absolute numbers will increase as more baby boomers reach that age. One place the financial strain shows up is food budgets: retirees who spend disproportionate amounts on housing spend half as much on food as people whose housing costs are under control.
• By 2028, 10 million people over 80 will live alone – nearly double the number today – and, lacking a partner, will have to pay all of their housing expenses. Many retirees are alone because they have become widowed, which means that the two Social Security checks that had been coming into the couple’s household are reduced to one check. Compounding the problem, older people who live alone tend to have lower incomes and higher rates of disability and a history of financial challenges, which perpetuate themselves in retirement. They also have more need for a home health aide’s services, which average $16,000 a year for just 14 hours per week.
   
  One effective way to ease housing costs is to live with family who can provide care, and an increasing percentage of older people are choosing this option – it’s especially popular with Latinos and Asian-Americans.  Nearly 10 million retirees live in multi-generational households, up from 6 million a decade ago.
• Tomorrow’s retirees will become increasingly diverse, largely driven by growth in the older Latino population and, to a lesser extent, black- and Asian-Americans. These groups are more vulnerable to rising rents, because their rates of homeownership are much lower than the rate for whites – the black-white homeownership gap is at a 30-year high. Homeownership offers retirees some personal security and a stable monthly mortgage payment. Some homeowners can afford to pay off their mortgages and drastically reduce their living expenses. But 26 percent of homeowners over 80 today still have a monthly payment, compared with only 3 percent in the late 1980s.
• The report points to a growing disparity in retirees’ incomes. People who were the highest earners during their working years are seeing steadily rising incomes in retirement, in part because the stock market run-up has generated income from their investment portfolios. But low earners, who rely heavily on Social Security in retirement, “have little opportunity for income growth beyond cost-of-living increases,” the Harvard study found.

One solution – at least for the lowest-income retirees – is to increase the use of federal rent subsidies. Only one in three of the 4.7 million older people who are eligible are receiving subsidies. And housing is about more than just a roof over one’s head. As more boomers turn 80, they will need all kinds of support services and community activities – meal programs, transportation, recreation – to lead healthy, productive lives.

Retirees’ quality of life and well-being, the study concludes, “depend on it.”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.