Middle-Income Seniors Will Struggle to Afford Paid Caregiving in 2033

Middle-income seniors will have restricted options for assisted living in 2033 due to financial strain, a study conducted by NORC and funded by SCAN Health Plan found.

The researchers relied on the 2018 Health and Retirement Study (HRS) to inform their projections about the senior population in 2033.

The study categorized middle-income seniors as individuals with assets and incomes amounting to $25,000 to $101,000.

The study found that by 2033 the middle-income senior population will swell to 16 million, 89 percent larger than the size of this group in 2018. This population’s growth will outpace the growth of the overall senior population, which will swell 64 percent from 2018 to 2033.

The two most significant sources of financial stability for middle-income seniors are housing and income. Housing equity can provide one- to two-fifths of their financial resources.

However, when housing equity is removed from the picture, seniors are left with very little left to cover assisted living costs. Even when home equity is included in seniors’ finances, senior housing is out of reach for almost four out of ten middle-income seniors.

These results project a continuation of the current financial environment for seniors. Separate studies have indicated that less than three in ten seniors had $500 set aside for emergency medical bills.

The results also hinted at a couple of other demographic dynamics that payers will need to keep in mind over the next decade.

Payers will need to ensure that their benefits and plan designs properly account for the needs of a culturally diverse senior population, particularly among low-income seniors who make up the most diverse population. A quarter of the middle-income senior population in 2033 will be people of color.

“The population is becoming more racially and ethnically diverse, which demands improved cultural sensitivity to meet the needs of all seniors,” the study noted.

Additionally, the study foreshadowed a rising need for paid caregiving. Most middle-income seniors will require paid caregiving in order to navigate life with chronic conditions and cognitive impairments since many will not have a spouse or nearby family. Around 9.5 million middle-income seniors will not have a spouse in 2033 and 40 percent will not have their children living near them.

The study found that more than half of all middle-income seniors ages 75 and older will have three or more chronic conditions. In the same population, 56 percent will have mobility limitations.

Middle-income seniors were less likely to be working at ages 75 and older than high-income seniors. Whereas 4.0 percent of middle-income seniors were working full- or part-time after 75, 4.3 percent of high-income seniors could say the same.

Financial difficulties are only one of the three main social determinants of health barriers that seniors face. Many seniors indicated that costs apart from healthcare take priority over healthcare spending and sixteen percent of seniors have outstanding medical debt. The other two top social determinants of health barriers are food insecurity and loneliness.

Separate studies have confirmed that Medicare is becoming more diverse. In the past ten years, Medicare Advantage plans particularly have seen a spike in diversity.