Cambridge Realty Capital President Andrew L Erkes identified “affordability” as the most significant challenge facing Baby Boomers as they look to access senior living and healthcare in the 2020s and beyond. While senior housing has evolved significantly in recent times, with new types and models of care available compared to 20 and 30 years ago, “the changes haven’t necessarily addressed the problem of affordability,” Erkess contended.
Perhaps no other generation has felt the financial pinch of aging as much as the Baby Boomers. According to experts, the Baby Boom population is the generation that is the least likely to have saved enough money to sustain themselves throughout the remainder of their lifetimes beyond retirement. There are a variety of reasons for this, and in many cases, it is not for lack of discipline. Throughout their lifetime, Boomers have had to contend with high rates of inflation, fluctuating interest rates, low wages, and changing technologies, all of which have contributed to the inability to bring in enough income to both live on and save for the future. Additionally, many Boomers experienced significant or even devastating losses in the housing market crash of 2008 and haven’t had enough time to adequately recover.
Baby Boomers are also coming of age during a time of uncertainty in the construction industry. Overall, the cost of building is rising for a number of reasons, including a nationwide skilled-labor labor shortage, the cost of adapting and implementing emerging new technologies, stagnant productivity, and ongoing workplace safety issues. The cost of operating and maintaining any given building has also increased.
Of course, SNF and assisted living facilities have the extra challenge of healthcare as part of operating costs. The cost of healthcare has also gone up considerably, adding to the challenges seniors face when independent living is no longer an option. And since, generally speaking, people are living longer than they were twenty-plus years ago, this puts more of a financial burden on Baby Boomers who don’t have the means to save money.
Constantly changing Medicaid and Medicare regulations aren’t making things any easier for SNF operators. “Affordability has always been an issue,” Erkes contended. “Skilled nursing facilities or Medicaid assisted living facilities have the potential to play a major role [in filling that need] if they get their funding,” he stated. Unfortunately, changing the rules midstream makes for an unpredictable and unreliable future. “Senior housing needs affordability and ways for operators to operate their facilities within the constraints of their current environment. As much as this sounds simple, these basic tenants will be harder and harder to satisfy moving forward unless the government has a bigger commitment to creating affordability and not changing the rules of the game so frequently so that committed operators can do their job and take advantage of different inducements the government may have or HUD may have.”
Aging and the issues that come with it, Erkes acknowledges, are inevitable. “The aging cycle creates certain needs and even though life expectancy is significantly longer today than it was 15 years ago, certain needs will ultimately take place,” he contended. And finding an affordable place to live that also has measures in place that take into account those needs is something that is of profound concern and interest not just to seniors, but also to their family members who are very often the ones who are tasked with securing that care. If the government can make a commitment to affordable senior living and healthcare, “The population at large can feel comfortable when turning their loved ones over to caregivers, without needing to micromanage this process,” Erkes believes. “At the end of the day, what is critical to senior housing are operators with a passion for caregiving, and government employees who understand how difficult running a senior housing business is and can give operators some slack.”
