A new Harvard study shows the inequality of wealth and opportunity that has become a stubborn feature of American life is being entrenched in the oldest segment of society.
Recent income gains — from investments, property appreciation, and retirement income — have gone disproportionately to the highest earners in the 65-and-older age group, while the number of older households burdened by housing costs has reached an all-time high, according to the report by Harvard’s Joint Center for Housing Studies.
The study, released Wednesday, comes as the number and share of older households in the United States are increasing to record levels, bringing the growing inequality to the fore as millions of seniors grapple with housing affordability and financial security in retirement.
“It’s a reflection of the larger forces in the economy where the ‘haves’ have more and the ‘have-nots’ are struggling to keep up and falling farther behind,” said Jennifer Molinsky, the report’s lead author and a senior research associate for the housing studies center. “We have experienced a good economy for the past few years, but we’re seeing a growing number of older residents facing cost burdens. So clearly the economy isn’t working for everyone.”
Molinsky said the problem is likely to worsen in the coming decade when the bulk of the baby boomer generation moves into its 80s and many seek to downsize in markets where senior housing is expensive and there’s a shortage of affordable options.
The number of households headed by someone over 65 climbed from 27 million to 31 million in the period studied. Within that age group, incomes of those in the top 10 percent rose 22 percent, while incomes of those in the bottom 10 percent fell 4 percent. Over-65 homeownership rates as a whole dipped to 78.5 percent last year from a peak of 81.1 percent in 2012.
Among the oldest Americans, the percentage of single-person households is rising, with the number living alone projected to more than double, to 10 million by 2038.
“Economic inequality is growing within and across the older population,” the Harvard study says. “While many households now of retirement age [65 and over] have the means to age in place or move to other suitable housing, a record number in this cohort are cost burdened and will have few affordable housing options as they age.”
Harvard researchers also cited figures from the US Department of Housing and Urban Development showing an uptick in homelessness among older adults. The percentage of the homeless population that is over 50 jumped from 22.9 percent to 33.8 percent from 2007 to 2013, with the number of people over 62 living in housing shelters rose nearly 70 percent to 76,000, that data showed
The report, titled “Housing America’s Oldest Adults 2019,” is a supplement to the Harvard center’s annual State of the Nation’s Housing reports that cover all ages. It examines the most recent data available, from 2012 to 2017, a period of robust growth in the US economy and financial markets following the great recession and housing bubble the previous decade.
Among the most troubling findings is that the impact from the 2008 recession still weighs heavily on many in the 50-64 age range who lost jobs and homes and, a decade later, still have lower incomes and homeownership rates than prior generations. Many also juggle more credit card and student loan debt than in the past.
For about 10 million households feeling the financial squeeze in the 50-64 age group, “ensuring financial and housing security in retirement will be a struggle,” the report says.
Low-income renters are experiencing the greatest pinch, the report suggests, with no ability to draw on home equity in their older years. Tenants over age 65 paid an average rent of $830 a month, compared to an average of $458 in taxes and insurance for older homeowners who have paid off their mortgages.
At the same time, racial and ethnic disparities have grown in the over-65 group. The gap in homeownership between blacks and whites was 19.4 percent last year, a 30-year high, and the gap between Hispanics and whites was 18.4 percent. The disparities were wider still in the 50-64 age range, which has a black-white homeownership gap of 27 percentage points.
Members of some minority groups, such as Hispanics and Asians, are more likely to live in multigenerational households, the report said. As such groups become a large share of the US population in coming decades, the number of multigenerational households is likely to increase.
Elissa Sherman, president of Leading Age Massachusetts, which represents nonprofit housing and aging services for older adults, said the trends outlined in the study are consistent with what she’s seen in Massachusetts, where the high cost of housing has made it difficult for many lower-income seniors to spend as much on food, health care, and other needs.
“The trends are going in a direction you don’t want to see,” Sherman said. “Part of it is the sheer numbers of baby boomers moving into the older age range, and they may not have sufficient resources for housing. Part of the problem is we don’t have enough affordable housing.”
Sherman said the report underscores the urgency for more federal spending on subsidized housing. On the state and local level, she said, the housing crunch can be eased by permitting more senior housing as well as steps ranging from homesharing to supports and services like age-friendly home modifications that let older adults stay in their homes.
One particular challenge researchers found is that more older Americans are heading into retirement with mortgage debt than in the past, said Chris Herbert, managing director of the Harvard housing studies center. That’s partly a function of a mobile economy in which many people move for better jobs but also a result of the refinancing boom where many take new mortgages with lower monthly payments — but in the process extend their terms.
Holding such debt as housing prices continue to rise in many parts of the country is “a recipe for a real squeeze among older adults,” Herbert said.