Only in recent decades has it been common for elderly people to live alone, or in retirement communities. Many Baby Boomers have not prepared themselves financially for retirement, and may end up living with their children. July 1, 2010 - When my mother was a child, a woman named Silvia moved into their house.
Since they were out of bedrooms and beds, my mom and her sister had to take turns sharing their bed with Silvia. Silvia helped out by watching the babies and doing laundry.
Shortly after Silvia found somewhere else to live, my great-grandfather moved in and lived there until he died.
Yes, that was life during the Depression, when neighbors and family stretched and shuffled to keep others off the streets, but it was also the way humans historically have lived until just the past few decades.
It also may turn out to be our future.
"Until recently, doubling up was the case for everyone," says Steve Hovany, president of Strategy Planning Associates of Schaumburg, who consults with municipalities and housing developers, including those who plan senior housing.
"It used to be that the eldest daughter got mom. That was not something they even discussed. That was it. Every time we used to want to talk about my mom's care, my sister thought we were going to move Mom in with her. [Recently] people have had enough money to live independently, but it's a relatively new phenomenon."
Some good friends of ours went into semi-retirement and moved to a vacation paradise. Because their previous home had deflated dramatically in value, they could not pay cash for their new home and the wife had to return to work.
Then, the husband's mother showed up on their doorstep, penniless. She moved in, requiring modifications to the stairs, grab bars in the spare bath, and daily living assistance. Our friends are taking it all in stride, but it is hardly the life they had envisioned for themselves.
Just a few years ago, developers and prognosticators were predicting the dramatic rise in senior housing and age restricted communities, even though everything else was trending downward. Since then things have, shall we say, slowed for the retirement communities of the world, Hovany says.
The Baby Boomer generation was predicted to spearhead this huge trend toward relaxed senior living. Financed by their well-padded 401(k)s and inflated home equity, they would retire with plenty of energy still in the tank, ready to golf and travel and scrapbook. With improved health, (except for that pesky obesity thing) improved longevity and a little Viagra, they were set to rock 'n' roll into their dotage.
Oh, well. It was a nice thought. A recent report by Standard & Poors reiterates the new reality that has been slowly sinking in: We cannot afford to retire, we cannot afford to move to Sun City, and we have to keep working, if our employers will keep us.
"Senior housing was the hottest thing on the market, now they have caught the same cold everyone else has," Hovany said. "Either Baby Boomers cannot sell their homes, or senior housing is too expensive or their kids don't want them to spend the money."
And without the home equity they expected, most pre-retirement Americans have very little savings for retirement, according to a new S&P report, "Pensions: Can We Ever Retire?"
Among their notes:
••At the end of 2007, the median household in the 55- to 64-year-old age group had total financial assets of only $72,400. Based on the performance of financial markets over the past three years, that number probably is now down to $65,000.
••Before 1990, the average savings rate was 9 percent (of income) but by 2007, it was 1.7 percent. We're now back up to 3.4 percent, but the report suggests that none of these rates will sustain 20 years of retirement.
••In 2009, 43 percent of survey respondents said they had less than $10,000 in savings, excluding their home equity or pensions.
The decreasing number of buyers for retirement homes has put a big crunch on the senior home building market. Until just a couple of years ago, retirement housing was going to be the bright spot in a gloomy home-building picture.
But according to a report released last month by the National Association of Home Builders, builder confidence in the 55+ market remains low. Every quarter, the NAHB asks builders to rate their confidence in the market compared to a number smaller or greater than 50. (Anything higher than 50 is considered to be a good market.)
For the first quarter of 2010, builders say their sentiments rated a 19, and their predictions for next six months rate a 30, which is what they said last year in the first quarter.
Multi-family housing for 55 and older buyers is even worse -- sentiments ranked at 11, worse than last year's 13. The only kind of senior housing showing any signs of life is for rentals, yet builders are not upping their plans to build age-restricted rental units.
The upshot: A long, relaxing retirement may be an artifact of the last century that will apply to only some Americans in this century -- those who have held a long-term, steady job with a defined benefit pension plan.
For the rest of us, we'll have to plan to work longer -- if we still have a job -- so that we can pay more into our 401(k)s, and can afford to stay in the home we have.
Instead of picking out carpeting for that new golf course villa, we'll be changing our doorknobs to handles designed for our arthritic hands so we can age in place.
But that will be better than moving in with Junior and his wife, won't it?
