As housing costs soar, these are among the top questions retirees and near-retirees grapple with as they transition out of paid work and into a life on a fixed income. It’s a particularly tricky issue for the so-called “forgotten middle” of the senior housing market—those who make too much to qualify for Medicaid and those who can’t afford traditional senior living.
By 2029, there will be 14.4 million middle-income seniors, 60% will have mobility limitations and 20% of whom will have high healthcare and functional needs, according to the National Investment Center for Seniors Housing & Care (NIC), which coined the term “forgotten middle.” Many will need the level of care provided by traditional senior housing, but 54% will not have the money to pay for it, NIC estimated.
To address this market, 2Life Communities will break ground in about a month on a $155 million development that caters to this demographic.
“We’re zealots that this is what leads to healthy, positive aging—having a quality place to live.” Amy Schectman, president and chief executive of 2Life Communities, a nonprofit that is developing Opus Communities in Newton, Mass., for middle-income adults aged 62 and older.
“It’s a moral imperative that people are not shut out,” said Schectman. “The demand is nearly infinite. No one is meeting this need. I want to prove this can work. We’ve hit on something that’s very resonating. We’ve hit the market with something the market really wants.”
The middle income seniors market includes today’s workforce housing cohort—teachers, firefighters, government workers and nurses—individuals with financial resources between $24,000 and $95,000 a year, according to a 2019 NIC presentation.
More than 700,000 units of seniors housing will be needed to satisfy potential demand from middle market seniors by 2029, NIC estimated.
“If this isn’t addressed, it will bankrupt all of us,” said NIC chief economist Beth Mace. “People who are schoolteachers, firefighters—those dedicated people who have worked hard and need a place to live and need to be taken care of. How do they get that?”
Medicaid covers long-term care services for very low-income individuals. High-income individuals have a wider range of paid options, including private assisted and independent living communities.
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The Opus Communities grew out of seven years of research and development, Schectman said.
The Opus plan envisions that their older residents currently own their own home and the value of that home has inflated since they bought it. Part of the value of that home can cover an upfront payment called a “share” and the rest can pay for care for activities of daily living, or healthcare as needed. The “shares” start at around $400,000.
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There will be 174 residential units, with 9 of those set aside for lower income residents who will be selected through a lottery. Units will start at 650 square feet and go up to 1,350 square feet.
Also, one key piece is that every resident will volunteer 10 hours a month to help reduce staff costs.
“The single biggest attraction to this concept is volunteerism,” Schectman said. “People want to be part of a community.”
The building also will be connected to a housing development for low-income older adults, so they will share administrative costs. It’s also adjacent to a community center that features a pool and indoor track and other amenities.
Opus’s healthcare options are centered around giving people the ability to stay in their homes and have healthcare providers come to them. There will be home care available that residents can purchase small increments of care, rather than the industry-standard of having a block of time booked that a resident may not initially need.
Opus’s construction will start soon and will take about 28 months to build.
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While Mace applauds the Opus effort, she said more development is needed to address the market demand for middle-income housing.
“How do you scale this? One-off projects won’t solve this,” Mace said. “We need public awareness, private sector help and public-private partnerships to invest in these properties.”
“The middle-income cohort is getting bigger and more diverse. For those who own a home, they can use home equity to offset the costs. But a lot of seniors don’t have their own homes,” Mace said.
Some middle income seniors will pay down their assets to become eligible for Medicaid, but the Medicaid system can’t handle all of that, Mace said.
“How do you create an affordable housing project, plus offer basic care, plus healthcare?” Mace said. “Nobody has figured out the secret sauce yet. There hasn’t been a slam-dunk, home run case yet.”
“We have single digits of housing developments and we need thousands and thousands,” Mace said.
Credit: marketwatch.com