Will migration for affordable senior living become a big thing as financial pressures on seniors increase?
“The world braces for retirement crisis” It is a long article about the growth of the senior population, the lack of personal financial responsibility and government lack of responsibility. The thing that really intrigued me, though, was a vignette about Mikio Fukushima, age 52, who lives in Tokyo and is thinking that in order to have the retirement lifestyle he wants he will need to move to Malaysia in order to live comfortably.
The Senior Living Economic Crisis
The serious hurt won’t hit for another 10 to 20 years as we boomers begin to need more help with activities of daily living. But it will hit and hit hard, there will be hundreds of thousands (maybe millions) of boomers who have worked hard at middle class jobs, made a decent to good living and spent almost all of it. They will be eligible for maximum social security and most will have, almost accidentally, managed to save several tens of thousands of dollars in in 401k & IRA investments that will generate a few hundred dollars per month in additional income. It won’t be enough money to pay for traditional assisted living.
Migration as an Option
There are two possible, even likely, migration options. The first and, in many respects, easiest is a move from a high cost area to lower cost area. . . from the pricey San Francisco area to Sacramento or Texas or Arizona. For some that will be enough to solve the cost problem and it is the easiest option to stay in the U.S. The bigger and bolder move is to leave the US or Canada for another low cost country. Probably most attractive at least from a cost standpoint are countries in South and Central America. Language can be a challenge in some countries, but there are lots of English speaking conclaves. In addition people are looking at Asia and some countries on the continent of Africa. Many British Boomers are moving to huge expatriate colonies in stable, coastal African countries.
What’s this mean to North American Senior Living?
It’s hard to say if this phenomenon will have a meaningful impact on senior living in the US and Canada. Most likely the answer is no, but it should be seen as another call to action. We need to get creative about new, quality senior living options that meet the needs of people with modest means. It likely means smaller apartments and maybe more compact common areas. It may mean taking a more cooperative approach, where residents actually work off part of their care. There are lots of places seniors could do this:
- The front desk
- Serving and preparing food
- Light housekeeping
- Marketing & Sales
- Activities
It may also mean there are opportunities for senior living operators and developers in other countries. Imagine if Sunrise or Emeritus had senior living opportunities in Mexico or South Africa or Costa Rica; the name association would likely make it much easier for North Americans to transition to a lower cost country. Would you ever do your retirement living in another country?
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Hi Steve… Thanks for posting your comments about the article which speaks of a potential worldwide retirement crisis. I too have witnessed the trend of not only moving to another state, but over the last 10 years, of moving to another country. I have met with North Americans in assisted living homes in Mexico, and in Ecuador where I am now. Boomers seem to be arriving with their parents almost monthly here as costs for care in North America are becoming prohibitive for some families. I’ve seen older Europeans at well-run, beautifully maintained homes in Chile who are thriving, and read about senior migrations to Africa, India, Thailand, and southern Europe. There is, no doubt, a trend. Thanks for outlining what it might mean for U.S. senior living.
There is no question that funds will become more scarce especially with inflation. Many retirees want to stay at home as they age, especially if they can do so safely and independently. As an advocate for in home care options I believe as a society we should be considering a broad based plethora of options not just in talking about renting, moving or “out of home” options. What about the segment of retirees who want to stay in home as they age as long as possible. We need to try to allocate resources based upon the concept of independence and the very real possibility of a strong desire to age in place. As long term care costs rise and govt programs shrink a retirees individual home equity needs to be part of the solution. A majority of retirees have much of their wealth tied up in their home equity. If there is a federal program out there that would allow access to this equity I think its pararmout it be considered a viable option.
There is a program to allow access to equity – such as it may be, and for however long it may be enough to help a person hold out at home. It’s called the Home Equity Conversion Program, and FHA insured program that allows a senior to stay at home and get payments off equity. Find out more at http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome
Hi Steve,
I would enjoy moving to another country; I’ve always been interested in culture and as a fan of continuing education for seniors, I know this would/will be a rewarding chapter in my life. I would be open to the location as long as it was relatively safe with good healthcare. Well, ok, and preferably not crazy humidity but I think that might just be a non-negotiable for the South American and African countries. :>)
This may be an attractive option for some, especially those who are more independent, but I believe it is more common for seniors to want to be close to family as they age. When funds are limited, it is a challenge for me to get them to consider a place that may be in another town nearby which has lower cost facilities. I can’t imagine them being willing to move to another country.
Another concern I have is that elder abuse laws don’t exist in all countries. In fact it is often overlooked or not recognized here in the US. This past year, I worked with two elder abuse cases which involved seniors who had voluntarily moved to other countries to receive cheaper care, but were taken advantage of and left completely broke. With the help of the American Consulate, they were able to return to family in the US, but there was no legal recourse to get their money or possessions returned. There are predators everywhere and seniors are especially vulnerable and need reliable protection and oversight.
Hi Wendy:
Some great observations. It is something that has been happening for a long time in Europe.
Steve
Hi Steve:
You are right about a large variety of options. Most seniors want to age at home and most will. But for some senior living is the best option. It is interesting that at least in the not-for-profit world, a number of senior living providers are either looking at or doing (and in some cases expanding) home services.
Steve M
Every place has their pluses and minuses. For me, it would be the distance from my family.
Steve Moran
Hi Linda:
Great point.
Steve
From LinkedIn Groups
I would just add one more elaboration on my point about tragedy versus opportunity — if there is family in the US, if a person has roots in a location that is familiar to them, has lived there for many years, has some means of support in the event that they become ill and/or need care — thenr moving to another country (language, new environment, unknown health and support systems, travel costs for family members if you become ill) are all potential obstacles that could make retirement an isolated and stranded experience. But even that masks the real problem:
Housing costs in expensive markets as well as senior housing costs in the US are so high — average cost of assisted living is now more than $50K per year, add more than a 40% uplift for memory care, the fact that CCRC communities are largely private pay — then consider the average value of pre-retirement assets, that is a tragedy.
By Laurie Orlov
From LinkedIn Groups
I like Lauries technology blog but have to disagree. The chance to live abroad is an opportunity. I live in La Paz, Mexico many months of the year and am not surprised to see many seniors move here to this small town and not surprised to see investors building first class senior living here, Cabo San Lucas and many other popular Mexican destinations. Check out http://www.amar.org.mx
By Steve Zasio
From LinkedIn Groups
We are in our 70s, live in Ontario and got our power (Hydro) bill yesterday. For one month it was $971.64. It made us wonder about affordable living elsewhere.
By Judy Robinson
From LinkedIn Group
sign me up and I would love the opportunity that this presents: to live and work in another culture – you raise a good point – will be interesting to see if we start to see this develop in the next 10 years or sooner
Thank you Steve for your article
By Cheryl Guenther
From LinkedIn Groups
As we age our quality of life should not dwindle.
By Nathandra Boudoi, MBA, Six Sigma Black Belt
From LinkedIn Groups
Yes.
Depending on the country and healthcare system. I believe it’s the only way I will be able to continue to live the lifestyle I am accustomed to.
Based on my studies in Gerontology we are lagging in developing strong appropriate measures and valid system to care for seniors in our communities.
Our society is too focused on looking youthful instead of managing our health in promoting aging gracefully.
Economics and cultural beliefs holds a a lot of communities hostage to moving forward in improving quality life.
By Nathandra Boudoi, MBA, Six Sigma Black Belt
From LinkedIn Groups
Many low-living-cost areas of the world are also
tropical vacation spots. While living there in a
retirement community would not be quite the
same as staying at one of the big tourist resorts,
careful selection of the facility could make the
move seem like a permanent exotic vacation.
By Walter Zintz
From LinkedIn Groups
I think being close to family is a big factor for most of us. It would probably deter me from moving to a far flung locale. How about you?
By Lorie Eber
It’s economics — where do your dollars go farthest? Including healthcare — assuming your needs could be met or you wouldn’t consider the option. Have heard many ex-pats fly back to the U.S. for healthcare needs; can’t do that for a ruptured appendix.
but as opportunity presents itself, smart countries will gain the infrastructure. Another consideration — would anyone [family and friend] come visit? Guess you could factor in some plane tickets for your kids as part of the equation.
By F. Todd Winninger
From LinkedIn Groups
There are several counties that offer high quality, affordable healthcare like Panama. If the weather was less humid, it would be an attractive option. The arts and culture is enticing and there is a large ex-pat community.
By Debra McKennon
From LinkedIn Groups
Steve you need to consider Puerto Rico in the mix. Whole costs may not be as low as some locations in Central or South America it may serve as an alternative for those who may not want to consider non-US locations. Most east coast cities have direct flights at what I assume more affordable rates than other locations for families considering visits. Also for relatives without passports PR becomes an easier visit.
Recently visited an AL location in PR and two residents had relocated from NYC.
By Augusto Gautier
From LinkedIn Groups
It’s an interesting question Steve. One would have to have the financial means to do so and be willing to leave behind family and friends.
By Victoria Brewster, MSW
From LinkedIn Groups
Steve, No I won’t move for higher quality affordable senior living. We can solve this problem. The primary issue is affordability for who and for what. The classes of the senior market have been designated and the associated cost determined i.e. independent living (buy in), assisted living, continual care, etc. For many seniors these facilities are not an affordable option because of cost. Some people may not have options because of special needs. However, for the majority of active senior adults there is an option emerging in the market place and that is the market rate rental active adult apartment communities. These communities consist of one store, attached garage, front porch and patio and a thousand to thirteen hundred square feet of quality living space. Community size range from 50 unites to a couple hundred units. The rent range from $1,000/month to $1500/ month with immediate access to shopping facilities, medical care services, churches and other social community services, including “in house” home health care services on an al a cart, as needed basis, for a fraction of current cost for the typical senior living facilities.
Senior rental communities that meet this formula enjoy excellent occupancy, lower than average operating expenses because of low turn over and an excellent community environment For the owner/developer the challenge is securing equity and debt for construction. Our company has eight such projects on the drawing board and we are continually pursuing financing relationships. With 10,000 people turning 65 every day this has to be the dominate market for seniors in the immediate future. Appreciate your comments.
By Harry Kennerk
From LinkedIn Groups
I agree with your suggestion that senior living communities need to find creative ways to bring down costs. I think that might work for residents who are high functioning, but I think impaired residents need more quality care than most communities offer. Any thoughts? I don’t think I’d move out of the country for care. Would you?
By Lorie Eber
Some great food for thought, Steve. We have heard that 25% of seniors can afford CCRCs, with 10% or less choosing the CCRC option. Government subsidized programs, such as HUD and Low Income Housing Tax Credit programs serve those with less than median income. Many persons choose to stay in their homes or downsize into active adult communities or other naturally occurring retirement community settings, yet there are many in the middle, in between CCRCs and subsidized housing, who desire a community living experience. We at Landis Communities are beginning to serve in this space by offering moderately priced market-rate age 55+ rental communities such as Steeple View Lofts in downtown Lancaster, PA – http://www.steepleviewlofts.com
Hi Larry: Thanks for joining the conversation. I am very encouraged when I hear stories about organizations working on the senior living cost problem. I would be interested in hearing your thoughts on how you see the assisted living cost problem, because it looks like you are on the right track.
Steve
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Hello Harry Kennerk,
tell me more about your company “market rate rental active adult apartment communities”.
My wife and I are actively looking to downsize.
Thanks
Wolfgang Richter [email protected]