Forecasters at Harvard University’s Joint Center for Housing Studies are trying to help land use planners, real estate developers, architects and builders understand what older Americans are like now, what they’ll be like decades from now, and how the demographic shift will change U.S. housing.
Their new report, Housing America’s Older Adults, could shape federal, state and local housing policy for generations to come.
The Harvard forecasters have delivered a real-estate-oriented version of the message agents and brokers have been trying to get out for generations.
“With the aging of the large baby-boom generation and increased longevity, the 50-and-over population is projected to increase about 20 percent by 2030, to 132 million,” the forecasters say. “In just 15 years, one in five people will be at least aged 65.”
Helping those people have “high-quality, independent and financial secure lives has thus taken on new urgency not only for individuals and their families,” the forecasters say, “but also for the nation as a whole.”
The report — and the Excel spreadsheet tables in its appendix — could be a useful data resource for agents and brokers who are trying to help clients analyze and meet post-retirement health care needs, whether through products such as Medicare supplement insurance, long-term care insurance (LTCI), or life or annuity products that offer benefits linked to long-term care (LTC) needs.
The report also includes some data on the current housing needs of Americans who already have disabilities.
Here is a sampling of seven figures from the report that might be of interest to insurance producers.
1. The older adults of the United States are in better shape than they used to be.
The forecasters report, based on Medicare Current Beneficiary Survey data, that life expectancy has increased since 1991, general health has improved, and older people typically spend a shorter amount of time suffering from severe health problems.
The number of Medicare recipients who said they had difficulty with activities of daily living (ADLs) dropped 22 percent between 1991 and 2009.
The forecasters believe that drop represents a real drop, not just a statistical mirage, because the percentage of Medicare recipients who said they had moderate limitations, such as difficulty walking a quarter mile, fell just 3 percent over the same period.
2. Even relatively high-income adults might not have much in savings — or much in cash-value life insurance.
In 2010, U.S. residents ages 50 to 64 in the top quarter in terms of income had an average of just $220,000 in retirement accounts, $62,000 in stocks, $25,600 in cash savings, and $25,000 in life insurance cash value.
Just 33 percent had life insurance with cash value. The older high-income residents who did have cash-value life insurance probably had an average of only about $75,000 in cash value.
(AP Photo/Phil Coale)
3. The Great Recession hit older Americans’ in the financial gut.
For people ages 50 to 64 in the top quarter of income, inflation-adjusted home equity fell to $203,000 in 2010, from $231,538 in 2007. Non-housing wealth rose to $497,000, from $466,166 in 2007.
For high-income people ages 65 and older, however, home equity plummeted to $262,000, from $419,073, and non-housing wealth also fell, to $761,200, from $876,595.
Inflation-adjusted household income for homeowners ages 50 to 64 peaked at $77,783 in 2007, then fell like a rock. In 2012, it stood at $72,200.
Thanks to Social Security and the remnants of the defined benefit pension system, older Americans ages 65 to 79 have done better: Their average income stood at $43,733 in 2012, which was close to the all-time high of $43,791 recorded in 2011.
4. Reasonable housing prices are good for sales of insurance and retirement savings products.
When people ages 50 to 64 have housing expenditures that take up less than 30 percent of their income, they spend an average of $693 per month on personal insurance and pensions.
When the near elderly spend 30 percent to 50 percent of their income on housing, they spend just $369 per month on personal insurance and pensions, according to a housing study table based on Bureau of Labor Statistics data.
5. Home care benefits are important, because most older people live at home.
Although many people eventually spend some time in a nursing home, “at any given time,” the forecasters write, “just 2 percent of older adults live in group quarters.” The forecasters define “group quarters” to include nursing homes, residential treatment facilities, and other facilities where the residents share regular meals.
Even when people are age 80, the share who are living in group quarters at any one time increases to just 8.3 percent.
6. Reverse mortgages help some but are probably not going to be major financial solution for many older people in the future.
The number of reverse mortgages made with help from the federal Home Equity Conversion Mortgage (HECM) program fell to 55,000 in 2012, after peaking at 114,600, the forecasters say.
Researchers have found that some borrowers have used the lump-sum HECM money to pay off other debts, such as mortgages, rather than to create a stream of income they can use to cover living expenses, the forecasters say.
See also: Professor turns reverse-mortgage firm CEO.
7. In a few decades, the size of the market for post-retirement acute health care and long-term care planning products may be surprisingly small.
The number of people over age 65 will grow rapidly for a few decades because of a combination of increasing longevity and the big size of the baby boom generation.
But the baby bust generation — the generation born from 1965 to about 1985 — is small.
In 2035, the number of people ages 80 and over might increase to 15 million, from 7.8 million this year, but the number of people ages 55 to 59 might actually fall to about 11 million, from 12.4 million this year.