Boomers, The U. S. Economic Collapse, And The Future Of Senior Housing
The Baby Boom generation, the nearly 80 million of us who were born
between 1946 and 1964, is the largest in U. S. history. Its size alone
guaranteed that Boomers would be our most influential generation, and
indeed their impact on the country’s social, cultural and economic
institutions is unprecedented. A "pig moving through a python," as the
Baby Boom generation has been aptly, if somewhat unpleasantly
characterized, is responsible for the youth movements of the sixties,
including those advocating civil rights and feminist issues, as well
as antiwar protests. As they entered their twenties, recoiling against
the excesses of the Nixon presidency and the Vietnam War, Boomers
adopted a culture of excess, coining the phrase "Don’t trust anyone
over 30," deeply critical of their parents’ conservative values,
especially those involving spending and saving.
Boom Times. Boomers have spent wildly and lavishly on
themselves, certain that the economic prosperity that followed World
War II would continue indefinitely. They turned into the "Me"
generation, its purpose, "Shop ‘till you drop," its goal, "He who dies
with the most toys wins." In a direct rebuke to their parents, Boomers
spent rather than saved, driven by wants rather than needs. When the
first wave of them decided to buy cars, the auto industry instantly
responded, gearing up to produce new cars at twice the rate of growth
of the American population.
Similarly, the housing supply was insufficient to meet Boomers' needs,
and the unprecedented demand for the limited supply of homes ratcheted
up housing prices, which eventually produced the "McMansion"
phenomenon. These are 3,000- to 5,000-square foot homes especially
designed for Boomer couples wanting luxurious spaces that would
confirm their opulent lifestyles. Indeed, the McMansion reflects an
especially powerful Baby Boomer trait: success deserves to be visible.
Trophies and lifestyle choices are the best evidence of a lifetime of
Now in early- and mid-middle age, between 45 and 63 years old, the
Baby Boom generation was, until very recently, wealthier than any
other age group, controlling 70 percent of the total net worth of
American households--$7 trillion--owning four-fifths of all money in
financial institutions, and accounting for nearly one-half of total
Boom Bust. Unlike their predecessors, whose accumulated savings
funded their retirement, Baby Boomers have counted on their assets to
deliver needed wealth. The spectacular performance of the
and the recent astounding appreciation of housing values produced the
results that are summarized above.
However, the stock market lost 47 percent of its value between
September 30, 2007, and December 2, 2008, a decline of about $11
trillion. This has primarily impacted older Americans, whose
lost $2.8 trillion, or nearly one-third of their value. (http://www.urban.org/publications/901206.html).
Equally devastating is a recent report by the Center for Economic and
Policy Research (http://www.cepr.net), which concludes that the
collapse of the housing bubble has decimated the holdings of the vast
majority of near retirees, who will have little or no housing wealth
this year and will be almost totally reliant on Social Security and
Medicare to support them after retirement.
Boom Bust and Senior Housing. It has long been assumed that Boomers’
post-retirement housing would mirror the opulence that has typified
their existence, high-quality, amenity-rich living with enhanced
amenity packages, including a library, movie theater, lounge and
billiard room, beauty salon and barber shop, chapel, heated swimming
pool and hot tub, bistro, formal dining room and activities rooms.
Independent living communities will be expected to offer a range of
technological amenities to meet the expectations of this tech-savvy
generation, including building-wide wireless Internet access, computer
labs outfitted with software intended to challenge and stimulate
residents' minds, and Internet cafes and bistros where they can take
their laptops and socialize with others while surfing the Web.
Some senior housing developers and marketers are beginning to pay
close attention to the impact of the current economic downslide, which
has drained many Boomers' savings and devastated the value of their
housing. The fact is that the collision between economic reality and
the expectations of Baby Boomers about the quality of their
post-retirement housing will dumbfound this, the "entitlement"
generation. Expecting McMansions, nearly destitute Boomers will likely
encounter retirement housing on a par with their first apartments.
And what about Boomers who at some point will need long-term health
care? Those who are relying on Medicare to cover its costs will be
equally dumbfounded: Medicare doesn't pay for long-term health care.
Boomers themselves will be writing the check for the
$2,500-$3,500/month cost (in current dollars) of
assisted living, the $4,800/month cost of
nursing homes--or the $8,000/month cost of round-the-clock in-home
health care. Only when Boomers' personal assets are gone will a
government agency, Medicaid, get involved. Medicaid's the one that
helps the poor and disabled, which means that the costs of care for
the overwhelming majority of Baby Boomers will be paid from state or
Medicaid, the program that was established to pay for the healthcare
needs of the poor and disabled, will rapidly be transformed into the
long-term care insurance
program for America’s Baby Boom generation.
About the Author:
Laurence Harmon writes for Great Places. For more information on
assisted living, go to Great Places!
Webpage by Paul Susic MA Licensed
Psychologist Ph.D. Candidate