Retirement housing costs and the effects of inequality. Research from JCHS spotlights the financial challenges seniors face finding affordable housing.

America’s aging population is facing considerable financial challenges when it comes to housing inequality. Research from the Harvard Joint Center for Housing Studies (JCHS) underscores the severity of these challenges. The number of older adults facing housing cost burdens has reached an all-time high of 10 million. And those aged 50 to 64 have lower homeownership rates and higher debt rates as compared to earlier generations.

“The falloff in homeownership rates among those approaching retirement, and the elevated levels of mortgage debt among those who do own, is concerning,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “And there are significant differences in owners and renters when it comes to preparedness for retirement.”

Retirement Housing Costs and Affordability

According to JCHS, homeowners have far greater net wealth than renters, which is why becoming a homeowner is a significant step in building one’s net worth. The median homeowner age 65 and over had a net worth of $319,200 in 2016. That’s compared to a renter of the same age whose net worth was just $6,700. Those who have paid their mortgage off fare even better with housing costs. Homeowners without a mortgage paid a monthly median of $458, compared to renters’ monthly cost of $830. 

Affordability is the factor Americans cited most frequently as a very important criterion when deciding where to retire in a survey by Transamerica. It was cited more often than proximity to family and friends, good weather, low crime rate, access to healthcare and recreational activities. Nearly 70 percent of Baby Boomers expect to work past age 65 or don’t plan to retire at all. More than 80 percent of them say their decision to stay in the workforce is financially motivated. 

How Low-Income Households Experience Housing Inequality 

Lower-income households are falling further behind their higher-earning peers in income growth. They’re also spending a higher percentage of their income on housing. The income of households age 65 and over in the top 10 percent increased by 22 percent between 2012 to 2017 while the incomes of those in the bottom 10 percent fell by 4 percent. The median income for the highest earners between the ages of 50 and 64 set a new record of nearly $204,000 in 2017. On the other end of the spectrum, the median income for the lowest earners, $14,400, plunged lower than the 2000 level of $17,100. 

Finding affordable housing continues to be a challenge for lower-income households and there don’t seem to be any easy answers. Almost thirty percent of Americans expect their standard of living to decrease in retirement, according to the research by Transamerica. Kyle Cohen, a 65-year-old woman, said she spends 79 percent of her social security just on rent in a recent profile for NPR and she doesn’t know what will happen if there’s another rent increase. 

“Addressing these issues will require concerted action at all levels of government,” says Jennifer Molinsky, a Senior Research Associate at the Center and lead author of the report. “This is especially true as the leading edge of the baby boomers reaches their 80s in the next decade and the need for affordable and accessible housing increases.”

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