The current U.S. housing crisis is being exacerbated by the rising number of older adults who have limited incomes and are struggling to afford housing and health care costs, according to research presented at a workshop hosted by Fannie Mae and the Federal Reserve Bank of Philadelphia.
The Joint Center for Housing Studies at Harvard University released a study which found that 70% of adults who are 65 or older will need to purchase long-term health care services at some point in their lives. However, their ability to purchase such coverage is hampered by high costs and limited public assistance.
The analysis found that only 24% of older adults earned enough income to pay for housing, living expenses and daily long-term care services, which has a median cost of $67,000 per year for seniors with a median annual income of $40,000. The shortfall was even greater for those with functional difficulties or households of color, particularly Black and Hispanic people.
Researchers from American University found that homeownership can be a potential buffer against rising housing costs and a way to promote affordability for multiple generations. Researchers found that homeownership had a stabilizing effect on the finances of households. Seniors who became homeowners were able to preserve more wealth as their liquid savings declined.
Shared living arrangements, which include adults living with another adult that is not a romantic partner, can also help lessen housing cost burdens, according to a presentation by researchers from the University of Kentucky. They found that 23% of older adults live in shared households, 16% as hosts and 7% as guests. Overall, living in a shared household helped seniors save between $500 and $700 per month by living in another person’s home. It was less clear how much hosts benefited from the arrangement.
Beyond shared living arrangements, researchers highlighted three scenarios for helping seniors afford health care, including extending rental subsidy programs to eligible seniors, which would enable 42,000 more households to afford the needed health care. Another option would be to fully fund long-term health care services for those enrolled in Medicaid. This would make needed health care available for an additional 1.5 million households. A third scenario is for homeowning seniors to use the equity in their homes to pay for long-term care. The third option would make the car available for an additional 1.6 million households. However, researchers point out that using home equity would have major implications for intergenerational wealth transfers and exacerbate the existing racial inequalities in homeownership.
