By Tom Mann, Principal, Executive Vice President, Strategic Marketing Services
With the senior living industry rapidly changing, it’s important for your retirement community to anticipate the changes, and be prepared for what’s to come. In this multi-part series, we’ll explore several factors and trends of the changing industry, including finances, prospect expectations, technology, health and wellness, partnerships, healthcare, transportation services, and much more.
Today, in Part I of Senior Housing Trends, we will explore the changing demographics and finances of our target market, and what this means for your community in the future.
What does the future of senior housing look like?
The wave of baby boomers, the oldest of whom turn 70 this year, means a substantial increase in your potential market size. The data, shown to the right, suggests strong growth opportunities in all segments of senior housing: independent living, assisted living, nursing care, rehab, dementia, and home-based services.
One associated question we frequently hear focuses on continuing care retirement communities (CCRCs) and whether prospects will be able to afford them in the future. This is an understandable concern, given some of the news we are seeing in the media. A recent Fidelity report says that 48% of boomers are not on track to be able to afford basic expenses in retirement, a figure echoed by the Employee Benefit Research Institute (EBRI), which declared that 47% of the oldest boomers were at risk. In addition, we know that only about 7% of age- and income-qualified people nationally move to CCRCs.
So, even with these projected numbers, why is Love & Company so surprisingly optimistic about the future of senior housing?
Fortunately, there are 2.4 times as many people over the age of 65 as there are people over the age of 80. This means that even if the proportion of people that moves to CCRCs declines from 7% to 5%, there will still be a 50% increase in demand for CCRCs over what there is today, in 15 years. We are seeing for-profit communities respond to this data with heavy investment, especially with rental senior housing.
Nationally, there will be some significant growth in the more affluent market segments, age 75+. With this information, we can determine that about 1/3 of boomers are well positioned to meet their financial needs in retirement, and 2/3 of boomers intend to keep working post retirement to meet financial needs.
So, as you can see, with a rapidly growing senior population who are financially prepared to pay for retirement costs, the future of senior housing should remain bright. In my opinion, the biggest threat to senior housing is the growing power of the technology that will allow people to age in place in their houses. That would be a shame, because it would understate one of the most important benefits this lifestyle provides: social connections … but that’s a post for another day.
P.S. Here are some predictions I made five years ago.
Additional Senior Housing Trends blogs in this series:
Part II, Senior Housing Trends, “What do senior housing prospects want?”
Part III, Senior Housing Trends, “Health Care and Senior Housing Trends”
Part IV, Senior Housing Trends, “Senior Housing Healthcare and Housing Technology Trends”