Long-term care out of reach for middle-income seniors by 2033
72% of these adults (11.5 million people) will have less than $65,000 in income and assets, which is the average amount needed to pay for private assisted living and medical care.
Many middle-income Americans who are now retired or near retirement may be on a collision course for financial difficulty in just over a decade, say researchers.
By 2033, more than 11 million middle-income seniors aged 75 and older may not be able to pay for assisted living and unlikely will qualify for Medicaid to pay for their long-term care needs, according to a study by the research organization NORC at the University of Chicago.
“Eleven-and-a-half million older adults won’t qualify for public assistance and will most likely be unable to pay for their long-term care and assisted living,” says Sarita A. Mohanty, Ph.D., president and CEO of The SCAN Foundation, which funded the research. “Homeowners may be forced to sell their homes and even then, many will not be able to afford their needs.”
The research relied on the Health and Retirement Study, using 2018 as a base year. NORC researchers examined individuals who were aged 60 and older in 2018, because they will be 75 or older in 2033. For each individual in the sample, the researchers modeled the probability of living to 2033 for inclusion in the future seniors category.
Although these seniors will have accumulated enough savings that they won’t qualify for Medicaid, it likely won’t be enough to cover care expenses. In 2033, 72% of middle-income seniors, or 11.5 million people, will have less than $65,000 in income and annuitized assets, which is the average amount needed to pay for private assisted living and medical care.
A comparison of the expected annual financial resources of middle-income seniors with the cost of assisted living rent and medical costs illustrates the shortfall:
- Two-and-a-half million seniors are expected to have resources of between $25,984 and $35,000; 3.1 million between $35,001 and $45,000; 2.9 million between $45,001 and $65,000; and three million between $55,001 and $65,000.
- The average cost of assisted living and medical expenses is expected to be between $65,001 and $75,000 for 2.8 million seniors; between $75,001 and $85,000 for 1.1 million; between $85,001 and $95,000 for 0.3 million; and more than $95,000 for 0.2 million.
These figures exclude home equity. However, even if these seniors sold their homes, 6.1 million of them (39%) still would have insufficient resources to pay their annual costs.
Related: Caregiver benefits: A competitive advantage that can help make a difference
Demographic trends will compound the problem. Researchers predict that the number of middle-income seniors will grow by 7.5 million (89%) from 2018 to 2033. Future seniors will be less likely to be married, and many do not have children living nearby to assist with care as needs increase. More than half will have three or more chronic conditions, and 56% will have mobility limitations. One in three seniors will face cognitive impairments, with that percentage growing to 40% for those 85 and older.
“In addition to the urgent problem elucidated by these new findings, NORC’s work also shows us that the middle-income, older adult population is becoming more racially and ethnically diverse,” Moriarty said. “We need a long-term care system, and one that is responsive to the cultural needs and preferences of a more diverse set of older adults and families.”