How Middle-Income Earners Considering Retirement Housing Get “Trapped in a Gap”

It’s a great time to sell a home at a profit, but…not the easiest time to downsize. Across the United States, attractively priced homes are hard to find.

And opting for a retirement community keeps getting pricier, too. As an article in Forbes recently put it, “There just doesn’t seem to be anything affordable for middle-income seniors.”

How can these older adults navigate their possible futures? Some are downsizing creatively. And some are finding ways to house themselves in mutually beneficial arrangements. Let’s take a look.

Luxury Senior Living Out of Reach for Many

Affordable senior living properties tend to put very low caps on applicants’ incomes. So a good number of middle-income adults — those receiving around $40K or less in yearly income — can’t get spots at these places. Yet luxury senior living is far too expensive for many.

According to commercial investment firm CBRE, costs involved in developing senior housing have risen sharply since pre-pandemic days.

Those who study age issues speak of middle-income seniors as “trapped in the gap.”  Another term used to describe them is “the forgotten middle.” These older adults have modest incomes, but can’t qualify for low-income health or housing opportunities. Some would be priced out of rental properties, but are managing to qualify based on their savings, or their home sale profits. They might not be getting their basic needs met in these situations, yet they’re still paying too much, considering their incomes.

Developers just aren’t focused on creating what they need. Builders don’t benefit from creating affordable properties unless those properties are part of a government mandate or incentive program.

New Trend to Minimalism?

Middle-income people in the greater Boston area do have a senior housing community designed just for them. If they can manage to get a spot there.

A nonprofit called 2Life Communities is charging rents starting from $1,800 a month for at its new property in Newton, Massachusetts. By way of comparison, nearby independent living communities cost more than $4,000 a month. The nationwide average is $3,800 a month.

2Life’s admittance fee starts at around $400K. That’s a hefty sum, but 2Life points out that other places charge three times that amount. When residents move elsewhere or die, 2Life returns 80% of the fee to them or their estates.

How does 2Life pull off (relatively) affordable senior housing? By cutting the typical amenities and tapping into the volunteer work of the residents themselves.

Atria Senior Living and Merrill Gardens, two major senior living companies, have started new, less-expensive lines of senior housing following the same basic model (common laundry rooms; fewer in-house meals). But without boost provided by subsidies that 2Life gets, they’re pricier.

What Are the Options for Seniors Who Want to Own?

More seniors have been hoping to grow older in their present homes, relying on new technology like delivery and telehealth apps. People on single incomes especially might struggle to find affordable spaces for downsized living. Some deliberately let go of jobs to bring their income down, in order to be eligible for subsidized opportunities, yet still can’t find anything. They’re competing with their peers for a piece of a finite pie.

But there are creative options that might be worth serious consideration:

Finding Like-Minded Housemates Is One Way to Go.

A growing number of older adults are seeking housemates, according to AgeWise Colorado

Friends could buy a home together, sharing a deed and the equity it represents. They could do this by co-owning as tenants in common. With this type of vesting, a deed shows each co-owner’s ownership percentage, so each can take on what they can afford.

Additionally, a co-ownership agreement could lay out:

  • What part of the home belongs to each owner.
  • How the purchasing costs are shared or allocated.
  • How the co-owners divide their responsibility for repairs and upgrades.
  • Who will cover what portion the monthly mortgage, insurance, assessments, taxes, and other expenses.
  • How the parties want to handle issues like kitchen use, pets, parties, overnight guests, and parking.
  • How the parties intend to bequeath their share after death.   
  • Provisions for handling their co-ownership if one party can no longer live independently.

Let’s be clear. Older adults shouldn’t have to get housemates on account of economic stress. But in the present reality, it’s a way for some to live in safe surroundings.

And these arrangements can lead to beautiful friendships. Here is a very sweet sample.

Some Governments Back Homeshare Arrangements.

Some state governments offer hands-on guidance and resources. In several Pennsylvania counties, for example, the Department of Aging offers its Shared Housing and Resource Exchange (SHARE). It matches homeowners with home seekers. Both people must be aged 18+ and one has to be at least 60 years old.

The benefits of homesharing?

  • The homeowner gets an income stream and the security of having another person around. SHARE allows aging in place to become real for them.
  • The home seeker gets affordable rent, a private bedroom, and an agreement that discusses the common areas and agreed-upon tasks, if any, that reduce the rent.

Guidance from the state helps ensure a safe and fair sharing situation. Counselors match applicants who submit references and sit for interviews. The counselor does the background checks and manages the introductions.

After the agreement is in place, the counselor guides a trial cohabitation period, and provides the participants with information about additional benefits and organizations.

For Multigenerational Living, High-Density Zoning Could Be Just the Ticket.

Some older adults are moving into accessory dwelling units (ADUs — sometimes known as “in-law cottages”) on a family member’s (or someone else’s) property. These are fully equipped units, often in the range of 700-900 square feet. ADU living is a great way to downsize and maybe even share resources.

Sometimes, it’s the elder homeowner building an ADU for younger family members. After all, housing costs are daunting for old and young alike.

Not all communities have warmed to the ADU trend, but many are leaning into what they call “upzoning” or “gentle density.” Some cities that currently bar ADUs are at least studying the possibility.

Ten states and counting, as well as Washington, DC and many towns have revamped their zoning provisions to back the ADU trend. Tens of thousands of tiny homes have popped up in the ADU-friendly states of California, Texas, Florida, and Georgia. AARP has helped multiple towns and cities adopt upzoning — including big cities like Denver, Kansas City, Louisville, and Raleigh.

Looking for housing in an ADU-friendly town? Go to the online housing offerings and type “ADU for rent” to begin your search.

The Baby Senior Boom: Looking Ahead

By 2030, about one in every five U.S. residents will be aged 65+. Where are they going to live? Now more than ever, middle-income senior housing is a rare commodity.

So, older adults are getting creative. They’re relying on their communities and their wits to navigate a challenging situation. And they’re saying yes, change can happen. Now the housing industry needs to listen.

Supporting References

Kerri Fivecoat-Campbell for Next Avenue by Older Adults With Middle Incomes Are Trapped In The Affordable Housing Gap (Apr. 29, 2023).

Meghan Rose, LeadingAge California, testimony before the California Assembly (Oct. 25, 2017).

Peter Grant for The Wall Street Journal: This Affordable Senior Housing Project Is Aimed at the Middle Class (updated Mar. 7, 2023).

Pennsylvania Department of Aging: Shared Housing and Resource Exchange (SHARE).

Paula Span for The New York Times: The New Old Age – Senior Housing That Seniors Actually Like (Jan. 29, 2023; updated Jan. 31, 2023).

And as linked.

Photo credits: Cup of Couple and Gary Barnes, via Pexels.