As things stand, Baby Boomers could be facing a serious housing crunch as they continued moving into retirement.
The increasing difficultly Millennials face on the path towards homeownership has been a popular subject in the real estate industry as of late. But something that’s gone relatively uncovered, is the impending financial struggles many Baby Boomers are expected to face as they transition from the workforce into retirement, according to a new report from the Harvard Joint Center for Housing Studies and the AARP Foundation.
The U.S. population is aging. By 2030, researchers estimate, the number of adults age 65 and older will rise to 73 million, more than double the current figure. Considering current trends in both rent and home prices, as well as the likelihood of those figures rising considerably over the next 15 years, come retirement, many of the countries aged population will need to dedicate a significant portion of their monthly income – the report says approximately 30 percent – towards housing, which will likely force cutbacks in things like transportation, medical care and food.
There are a plethora of factors contributing to the tough situation in which the country’s seniors are finding themselves, but it’s retiring with a lack of savings and a surplus of debt that researchers have labeled as public enemy No. 1.
The hurdles facing seniors in retirement are considerable, and not only for homeowners. Renters, as well, are finding it increasingly difficult to secure adequate lodgings for an affordable rate.
Here are a few important statistics the report offers:
- In 2010, nearly three-fourths of Boomers ages 50 to 64, and 40 percent of those age 65 and older, transitioned into retirement still owing money on their home.
- Seniors are struggling with non-housing related debt, as well, with average debt for people 65 and up climbing from $4,300 in 1992 to over $7,000 in 2010. Researchers say the debt is mainly the result of credit cards and auto loans.
- Only one-third of seniors living on low-income who were eligible for federal rental assistance received it in 2011.
Changes Are Needed
The outlook for seniors, in our current government and real estate climate, is, sadly, bleak. Over the next ten years, the report projects that the number of households age 65 and older living on less than a $15,000 annual income, which is below the 2014 poverty line for a two person household, will grow by upwards of 40 percent.
The drivers behind the daunting figures, as researchers point out, are rising rental rates, home prices and an overall tough economy, but the reports also puts some of the blame on the government, citing the large portion of eligible seniors unable to obtain rental assistance.
Still, there is hope.
“While there are significant challenges ahead, the potential is there for older adults to have a higher quality of life than ever before, and for communities to be increasingly livable and vibrant as a result,” the report reads. “But effective action will require concerted efforts at all levels of government, as well as by the private and nonprofit sectors, and through the advocacy of older adults themselves.”
In the report, researchers lay out a number of potential solutions to the problems, ones that must be addressed as a collective, rather than individually. For instance, a number of federal efforts, like rental assistance and Medicare and Medicaid, need to be expanded and restructured to ensure that seniors are more capable of leading self-sufficient lives.
Also, funding for housing supportive services is becoming an increasingly necessary measure, especially considering the limited number of housing units available.
If adequate changes are to be made, however, it’s first essential that not only the federal government, but local and state governments, as well, work together to expand housing and transportation options while promoting accessibility in both the home and built environments.