In general, middle-income seniors have income and assets that make them less likely to qualify for Medicaid. At the same time, they may not have adequate resources to pay for the rising costs of housing and care options they need.
A NORC study done in 2019 and updated in 2022 shows that nearly three-quarters of middle-income seniors in the US will be unable to afford assisted living programs by 2033 without selling their homes. It is the first study of its kind focused on a growing health care crisis.
Data Used in the NORC Study
The researchers examined gender, race, and education and estimated people's health, cognitive function, and mobility status using the data for these conditions in 2018.
They evaluated financial resources in 2018, starting from actual income and assets. Then grew them based on the historical changes in each category, annuitized across each senior participant's life expectancy and their spouses.
Data for financial resources included fixed income streams, such as Social Security, and annuitized assets like retirement savings or mutual funds. The study did not assume adult children could provide support. While housing equity is considered, the reality is that some individuals may be reluctant to sell their homes or have a spouse who continues to live there. Also, many seniors may want to keep their homes as a resource to protect against outliving their assets or having a catastrophic medical event.
With 16 million middle-income seniors in 2033 and 11 million over the age of 75, the size of this demographic will double to include the following statistics:
- Roughly 9.5 million will be unmarried, widowed, or divorced
- Four in 10 will not have family members living nearby to offer care or support
- Over age 75, 54% will have three or more chronic health conditions, 56% will have mobility limitations, and 31% will have cognitive impairments
- Average financial resources of less than $65,000 in income and annuitized assets will not cover health, personal care, and housing services
Even after selling their homes, seniors in 2033 will struggle to pay for assisted living or require additional help from family members. Health limitations will make it hard to live independently. Without government assistance like Medicaid, this creates a significant problem. Clearly, efforts must be made to improve the affordability of long-term care for seniors, particularly for those of lower middle incomes.
What It Means for the Future
Without a long-term care system able to accommodate a more diverse set of older adults and families, only the individuals with the lowest incomes will be provided with care. Others will be reliant on their families.
Combined public and private policymakers should examine healthcare and housing policies to extend funding for in-home care and caregiving support to prevent middle-income seniors from spending down all their assets to transition to nursing homes. And the long-term care industry must offer more affordable senior housing and in-home care options.
An Immediate Solution
Estate planning and elder law services are necessary to prepare for long-term care costs in the future. By starting early, a thorough evaluation of income and assets can provide resources and options over time. Long-term care and Medicaid planning, including using trusts to protect assets from being spent down for care, can prevent families from having a financial and medical crisis.