At What Age Should Seniors Downsize

At what age should seniors downsize?

You’ve been working on your retirement plans and wondering when to downsize? When your peers move may matter. Are you going to be surrounded by peers or your parents’ contemporaries? So, when are most Baby Boomers moving to Senior Housing? Is it too early to make that move while in your 60’s or early 70’s? Maybe where is the question? Is this generation of retirees even considering Senior Housing communities? The marketing literature and pitches show retirement communities full of youthfully energetic Baby Boomers. Is that a fair depiction of reality? Or do Baby Boomers have something else in mind? Is smaller enough and less maintenance? Or is less expensive the goal?

42% of Boomers Want to Move or Downsize

New data from a survey conducted for TD Ameritrade shows that retirees are likely to change their living situation if they haven’t already. But that doesn’t mean moving to traditional Senior Housing communities. According to the TD Ameritrade survey, 42 percent of Americans plan to downsize in retirement. Why? What are they looking for in a new home?

  • 25 percent plan on moving to a warmer climate;
  • 17 percent plan to move closer to family; and
  • Just 6 percent plan on moving to a senior living community

https://freshaccounts.amtd.com/blog-details/2018/Retirees-Living-Large-by-Going-Small/default.aspx

So warmer and closer to family for sure. Maybe more economical and less maintenance. Expensive, age-segregated senior communities? Not so much.

At What Age Should Seniors Downsize

Reality: Boomers are not moving into Senior Housing

Reality: Boomers are not moving into Senior Housing

‘Boomers’ are waiting longer than prior generations to consider senior living options.  A US News survey confirms the dismally low interest of Baby Boomers in Senior Housing. Only 10% of Baby Boomers say they are even interested in Senior Housing (US News 4/6/2015). That may change with age and health but for now? Boomers are telling the Industry they’re not yet interested. Those youthful Baby Boomers you are seeing in the marketing materials…are a marketer’s wish, not reality.

Wish we’d move sooner

What do retirees wish? If Boomers are not moving (or even considering Senior Housing), will there be future regrets? After all, leading-edge Boomers are now in their 70s and current, younger residents in Senior communities frequently report, “We wish we’d moved sooner.”

At AgingWithFreedom, we agree our parents and their peers often moved too late. Too late to fully (or ever) live the promised active senior lifestyle. Too late to enjoy the shared community activities. And way too late to form new friendships and enjoy the proffered social engagement.

The G.I. Generation and Silent Generation had different expectations and experiences. Boomers are working later and living longer. And dementia, once believed to be a barrier to making a successful downsizing transition, is beginning at a later age. “In 2000, people received a diagnosis of dementia at an average age of 80.7; in 2012, the average age was 82.4.”, Gina Kolata, New York Times.

With longer lives and lower rates of dementia, most seniors are enjoying more years of life with good cognition.

Two years ago, Eileen Crimmins, AARP chair of gerontology at the University of Southern California’s Leonard Davis School of Gerontology, and colleagues documented this shift in the United States in research using data about adults 65 and older.”

“In 2000, she found, a 65-year-old woman could expect to live 12.5 years with good cognition, four years with mild cognitive impairment and 2.6 years with dementia, on average. A decade later, the period in good cognition had expanded to 14.1 years, with 3.9 years spent with mild cognitive impairment and 2.3 years spent with dementia.”

“For men, the 2010 figures are different: 12.5 years with good cognition after age 65 (compared with 10.7 in 2000); 3.7 years with mild cognitive impairment (the same as in 2000); and 1.4 years with dementia (compared with 1.8 years in 2010)”, Judith Graham, Washington Post

So where’s your balance?

At what age should seniors downsize? Or will Baby Boomers choose to enter Senior Housing at all?  

Range of Communities and Living Options

Full-service senior living communities offer a range of living options. The range spans a mix of needs from housing and social engagement to various levels of help and care. Independent Living is the lowest level where the emphasis is on hospitality and social activities.  Assisted Living and Memory Care offer much more help tailored to individual needs. Skilled Nursing provides rehabilitation and long-term care. The level of amenities can range from basic to luxurious. Prices vary. These full-service communities are Continuing Care Retirement Communities (CCRCs). The industry’s new marketing lingo for CCRCs is Life Plan Communities. But there are also stand alone offerings in each category. Contracts vary from rental to pricey buy-ins.

Like most Senior Housing, CCRCs are age-restricted communities. Residents must be over some minimum age. Ages 55, 62, or 65 are the most common legal thresholds. The legal minimum has little to do with actual average entry ages. Ignore all the advertising emphasizing active senior living. Look for yourself. Ask about the average resident age. The real entry age is often older. Much older — by decades not years.

What is the average age of a senior in a retirement community?

Too many Communities, especially CCRCs, base their marketing plans targeting anyone age-70 and over. Back in the day that may have been a good number. But it no longer reflects the reality. Age is relative. Boomers don’t feel old or ready to move at age 70. Age 81+ is a better estimate!

“High-end communities featuring lifetime care and lots of amenities draw new residents who are, on average, 80 1⁄ 2. Communities that provide a narrower range of independent or assisted living services draw new residents who average 84 years of age.” – Margaret Wylde, President and CEO of ProMatura Group, an Oxford, Miss. research firm that has done extensive work with senior communities.

Age 80+ is the age when care often becomes a question. Perhaps a health crisis rings the bell. Moving to follow an adult child in a new, distant city is a thing. You probably know some trailing grandparents. (Like the trailing spouses of our careers.) Regardless, the average age of entry into Senior Housing is going up, not down.

This entry age does varies by the community. New communities can attract a younger demographic. But especially for established communities, the mid-80s is often the average age of entry. That means new residents are already more frail than many communities planned. You may want a few neighbors your own age.

3 trends are working against a new entry wave of Boomers.

The Big Three

Three things are working against traditional senior housing geared to attract 70-year-olds. Occupancy rates are on average falling.

Changing consumer behavior. Yes, there’s a big demographic wave of baby boomers hitting retirement. The front of that wave born right after WWII is turning 70. But they are not behaving like their parents. They often aren’t even retired at 70. Many don’t even plan a hard stop to careers. They expect to retire later and live longer. They have a strong preference to age-in-place.

Greater economic uncertainty. The Great Recession and a shrinking middle class hit the baby boomer generation hard. The boomers have relatively smaller retirement nest eggs than their parents. Stock-market-driven 401Ks are their retirement security blankets. The performance of defined contribution plans is not guaranteed. Earlier generations had more secure, predictable cash flow from defined benefit pensions. Baby boomers are conscious of this volatility and vulnerability in their paper wealth. A volatile stock market and volatile home values mean boomers are twice burned. Boomers are thus more reluctant to lock-up assets or give up cash flow with a hard to reverse commitment.

Rising prices. Consumer inflation may be low. But healthcare is inflating faster than other costs. Healthcare is rising at two to three times the rate of wage growth. And much faster than the catchall Consumer Price Index’s (CPI’s) basket of household goods. CCRCs package real estate, hospitality amenities, and care together in a bundled price. As the cost of healthcare and caregiving goes up, so does the cost of CCRCs. CCRCs have an affordability problem. Seventy-year-olds perceive they can’t afford what these communities are offering. There’s too much uncertainty balancing remaining money and remaining time. They can’t afford it. Moving to a CCRC is out of the question until they’ve exhausted the age-in-place strategy. Age-in-place is both more familiar, less expensive, and more flexible.

So most baby boomers are waiting longer to downsize. Longer to move into senior housing.

That leaves the industry scrambling after the upper end of the wealth and income scale. That’s a race not every senior community can win. And building for the middle-income, Social Security dependent senior is a challenge.

AgingWithFreedom is surprised how little has changed in this industry over the past thirty years. Yes, the back office management is now digital, but what residents see is remarkably the same. Even the architecture often seems locked in amber. Classically inspired formal decor appealed to the Camelot generation. It’s still out there. But baby boomers like open floor plans, informal decor and independent choices. Senior living communities shouldn’t look so much like funeral parlors if Boomers are to be the new wave.

Too many communities ignore the changes in retired boomers’ behavior, tastes, and preferences.

So what will be the boomer entry age?

We predict most Boomers won’t move until there is a dire need to move. Like a major health crisis. This will keep most Boomers out of senior housing until their 80’s. If true, we will have lost the lessons of our parents’ generation. Boomers will be moving too late to make the move a positive, happy transition into a vibrant community.

AgingWithFreedom thinks something has to change.

A senior community’s services should begin while retirees are still living in their “age-in-place” homes. Many Boomers will downsize, but not into a Senior Housing community. Hip urban, mixed-age developments are attracting Boomers. The neighborhood’s feel and amenities matter. The socially required volume of private space might shrink to be more affordable. Think the Tiny House movement as inspiration. Boomers appear to be swinging from McMansions to Minimalism. Boomer consumers might also choose less desperate care in their last phase of life. Or perhaps they consume both healthcare and assistive care in less expensive venues. Something has to give.

When should you make the move?

Baby boomers are not going to buy the exact same thing their parents wanted. When should you make the move into senior housing? Get to know this industry. Spend time researching the right community for you! Determine the real age of the current residents. Marketing can mislead. Unless something changes, most Senior Housing communities are still geared to support ages 84+. But don’t ignore the benefits of moving earlier rather than later if you can afford it! In the meantime, consider downsizing as an intermediate step. Downsizing space can downsize financial worries and maintenance burdens, leaving more time and money to enjoy life.

US News: 7 Baby Boomer Housing Trend to Watch (https://money.usnews.com/money/blogs/on-retirement/2015/04/06/7-baby-boomer-housing-trends-to-watch)

https://www.senioradvice.com/articles/what-is-the-right-age-for-assisted-living

2 Comments

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  1. If you’re defining senior living communities as assisted living, then you have a point, but active 55+ communities are alive and well. Communities like The Villages in Florida, Del Webb, and others are expanding rapidly, thanks to Baby Boomers.

    • Dave, we’d twist that a bit to say that the prospective market confuses Assisted Living with some active 55+ communities. The Villages, Margaritaville(s), and Del Webb (e.g. Sun City) are something of the exception to the rule. We think these companies understand the market better than the average independent living facility, or CCRC. But they also seem to be more limited to warm weather destination locations. We lived in Phoenix. There, even many mobile home parks are great senior social centers. But go to Minneapolis and it’s tough to find anything like The Villages. We’re personally very interested in some of those you listed. And having gone through helping parents who moved too late to enjoy the social supports, we’re very much more inclined to move (downsize) sooner rather than later. We still think the intergenerational trend is significant and expect more intermingled or mixed-use communities. The recent survey of younger baby boomers warns that “senior housing” carries a lot of baggage. The boomers’ aging-in-place predisposition ignores the eventual isolation and burdens. We say aging-in-place works until it doesn’t, and then it’s too late. Younger Baby Boomers, Gen Xers Would Like to Avoid Seniors Housing in Retirement, Survey Finds

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