The percentage of middle-income seniors has declined over the past 50 years, according to a new analysis, but those results don’t necessarily mean that there will be fewer middle-market senior housing opportunities, according to one industry expert.
A new Pew Research Center analysis of government data found that the share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021. At the same time, the analysis found, the share of adults in the upper-income tier increased from 14% in 1971 to 21% in 2021, and the share of adults in the lower-income tier went from 25% to 29%.
“It’s important to remember that what is considered ‘middle-income’ in one area of the country is not going to be the same in all other parts of the country,” Ryan Brooks, senior principal of healthcare strategy at the National Investment Center for Seniors Housing & Care, told the McKnight’s Business Daily. “What’s considered affordable in Boston may be considered expensive in rural Iowa.”
The Pew analysis is a retrospective look at what has happened over the past five decades. In contrast, Brooks said, the Forgotten Middle study, conducted in 2019 by NORC at the University of Chicago with a grant from NIC, projected population numbers, housing and functional healthcare needs of older adults by income group through 2029. The study, published in the journal Health Affairs, projected that the middle-income older adult population will almost double, from 7.9 million (40% of the senior population) to 14.4 million (43% of the senior population), from 2014 to 2029.
Brooks said that although the methodologies for the Pew and NORC studies vary slightly, “they both agree that in raw numbers — the middle-income senior cohort grows over time, even if the percentage of the senior population does not. That’s important to remember, because even though the percentage of middle-income seniors might decline, the overall raw number still increases.”
Additionally, he said, other factors affecting members of the middle class as they age are important to remember. Pensions and defined benefit plans that previous generations have counted on have gone away in many instances, Brooks said, and they have been replaced by 401(k)s or other defined-contribution plans.
McKnight’s Senior Living previously reported that more than half of Americans don’t have any plans in place for long-term care as they age, and many halted or reduced retirement savings contributions during the pandemic.
“As a result, future seniors have lower overall savings compared to prior generations,” Brooks said.
The use of unpaid, family caregivers will become more challenging in the future, he added, as people have fewer children and those children that are had are less likely to live nearby.
“When considering a middle-market senior housing opportunity, there needs to be an assessment of the care needs and economic health at the local market level to really understand the general affordability in different markets,” Brooks said.