A booming aging population, a shrinking workforce and slowed construction trends provide a “compelling look” at the future of the senior living industry and the effects that the baby boomers will have on it, according to a new white paper.
In “The Future of Senior Living,” senior living management company LCS tags 2030 as a “pivotal moment” in the nation’s age demographics, as all baby boomers will have reached age 65 by that year, representing one in five people in the US population. By 2060, the boomers, who will be turning 96 to 114, will represent almost one in four of the total US population.
Specifically, the LCS paper focused on the age dependency ratio, which evaluates the changing age of the population and pressure on the working-age population of 15- to 65-year-olds. Mindi TenNapel, MBA, PhD, a data scientist behind the paper, said the data showed that the young dependent ratio — those aged fewer than 15 years — and the old-age dependent ratio — individuals aged more than 65 — show a divergence that begins in 2030 and continues through 2060, with the number of old-age dependents dramatically increasing while the number of their younger counterparts remains relatively consistent or declines slightly.
This, according to LCS, indicates a need for a “dramatic shift” in resource allocation to support older adults, as the decline in available workforce also leads to a downturn in the overall number of caregivers.
“This highlights the labor shortages we are going to experience and emphasizes the need for senior housing to be unique in thinking about how to be more efficient and provide care for an aging population,” TenNapel told McKnight’s Senior Living.
From improved hiring processes to scalable technologies to improve care, senior living operators can increase efficiencies by using robotics, artificial intelligence and process automation tools, according to the paper.
Penetration tied to occupancy
Unpacking US Census Bureau data, the paper notes that the 75-and-older population will almost double from 2023 to 2060, increasing 30.6% from 2023 to 2030 and 30.5% from 2030 to 2040. This change, LCS stated, emphasizes a more immediate need for increasing the number of senior living units available.
With a variety of housing options available, LCS looked at penetration rates, or how well senior living is accepted in a market. To identify markets that will support a senior living community, LCS created a market viability rating to identify key market metrics that are statistically correlated with community performance. LCS is using its new data capabilities to access real-time statistics to drive decisions across its business.
TenNapel said that the rating tool helps LCS think about markets in a different way. Using the penetration angle, she said, the rating showed that penetration is not equal across the nation. Minneapolis, for example, has a penetration rate of 23.9%, whereas New York’s rate is 5%. She said the key is to find pockets that are ready and in need of senior housing.
Historically, she said, the industry viewed low penetration as a good thing. But the data revealed that as penetration went up, so did occupancy. That finding led LCS to reposition its thinking about penetration and look at it more as market acceptance.
Using a third-quarter 2023 National Investment Center for Seniors Housing & Care penetration rate of 11.3% for adults aged 75 or more years, LCS projected that approximately 679,000 additional senior living units will be needed by 2030, a figure that increases to 1.4 million by 2040. And with inventory growth at its lowest point since 2006, according to NIC, providers have a “significant” opportunity to increase awareness of the benefits of senior living.
“From the growing senior population to shrinking working force and reduced construction, the landscape of the future is multifaceted,” the paper concluded. “These projections underscore the need for additional supply as the current state of senior housing will not meet the demands of the silver tsunami.”
