(Credit: Morsa Images / Getty Images)
Middle-income older adults are looking for alternatives. Although they are cost-conscious and looking for value over frills, they also want quality and supportive services.
That’s according to participants in a Wednesday presentation about middle market senior housing opportunities coordinated by the Florida Assisted Living Association. Panelists presented data on the “forgotten middle” as well as solutions for delivering care and housing at a reduced cost for older adults whose income is too high to qualify for Medicaid but too low to be able to afford many current senior living communities.
Future senior living residents have lower overall savings than previous generations, and they lack the family support that many of today’s older adults enjoy, said Ryan Brooks, a senior principal for health policy and analytics at the National Investment Center for Seniors Housing & Care.
Reiterating information from a NIC-funded study from 2019, Brooks said that in 2014, approximately 20 million older adults were aged 75 or more years — 7.9 million of whom were considered middle income. By 2029, the number of middle income seniors will increase to 14.4 million, accounting for 43% of the total senior population.
Those future middle income seniors also will have considerable health problems — 8% will have some form of cognitive impairment, 50% will have mobility limitations, and 20% will be considered high needs with three or more chronic conditions and at least one functional limitation.
With the annual average out-of-pocket price point for assisted living sitting at $60,000, only 6.6 million older adults have the financial resources available to afford it today. The challenge for operators, he said, is achieving lower price points to make senior living more affordable to more older adults.
Innovation Senior Living CEO and Founder Pilar B. Carvajal, a 2019 McKnight’s Women of Distinction Hall of Honor inductee, said that middle-income older adults are looking for socialization and activities inside and outside of their communities.
“They are looking for a place to live their lives, not just a place to live,” Carvajal said.
Secret sauce means strict expense control
Having worked in affordable housing, Carvajal said the “secret sauce” for middle market senior housing lies in strict expense control. That means limiting specialty licenses, providing a la carte services, using residents as volunteers, partnering with outside providers for support services and training a “universal” workforce of people who serve multiple functions.
Carvajal said that although developers and operators still are targeting affluent individuals with new developments, an opportunity exists for middle market developers to acquire distressed assets or to repurpose existing buildings such as hotels, motels, office space, multifamily housing or even luxury assisted living communities that failed.
“It’s a better strategy for the middle market to acquire and put in your secret sauce to make them operate better, or repurpose buildings,” Carvajal said. “I don’t see giving care to someone and where they live an obstacle of the building [itself]. You can bring services to them wherever they live.”
Many older adults desire to age in place in their homes because they don’t see a place for themselves in current senior living offerings, she said. The solution to appeal to middle-income seniors, Carvajal added, is taking affordable up a notch or luxury down a notch.
“The middle still expects some level of frills,” she said. “They will forgo some things, but they will demand high-quality care and comfortable environments.”
Hitting the sweet spot of the middle market means providing a quality living environment while not going overboard, Carvajal said, adding that operators must manage the expectations of prospective residents.
“In terms of what people are focused on, individuals are not looking for frills, but value,” she said. “It isn’t necessarily the physical plant they are focused on. They are focused on the care and services you are providing.”
