Housing for seniors is a hot issue across the country. The burgeoning growth of older adults in the United States created a need for housing across the economic spectrum. If you consider that the population of people 65 and older is projected to reach 80.8 million by 2040, you can see the scope of the problem. Affordable housing is a challenge for any age group and many older adults may be in better shape to afford alternative housing. The reason? They already own a home and can sell it to finance another living situation.
We can’t consider what older adults want without looking at individual cohorts. The oldest of old may prefer assisted living due to increasing care needs and safety concerns. That leaves a huge cohort of adults between the ages of 43 and 77. Generation X was born between 1965 and 1980, and the oldest are 58. Late baby boomers are individuals born between 1955 and 1964, and they are between the ages of 59 and 68. Then there is the first of the boomer generation born between 1946 and 1954, the oldest being 77.
What do these diverse ages have in common? More than you might think. Gen X may want apartment living with amenities and opportunities for socialization. Boomers may want to be close to families and grandkids but also take advantage of social opportunities in a vibrant metro area.
Two unique housing opportunities aim to address the need for affordable housing, and provide support and socialization. One is accessory dwelling units (ADUs) and the other is high-rise apartment buildings that are intentionally intergenerational and, in some cases, senior-specific. We will look at the pros and cons of both as you and your family consider what is best for you, with an eye to the future and inevitable changes. There is no perfect answer, but the more informed you are, the better your chance of making a wise investment.
Accessory dwelling units are secondary housing units on a single-family residential lot. Typical names are backyard cottages, mother-in-law apartments, granny flats (although it is often the adult children who live there) or laneway houses. Other characteristics:
As with any housing choice, there are pros and cons of ADUs. For some families, housing for an older parent or grandparent may not be the purpose of an ADU. Some people use ADUs for rental income or to house another family member who can’t afford a single-family home. But our focus is on older adults and the reasons for a surge in interest in ADUs.
Ease of caregiving. As families struggle with caring for their loved ones, proximity matters. Having someone close in an ADU makes caregiving easier, not to mention the ability to monitor someone closely. If there is an emergency, family can respond quickly.
Close to family. An ADU makes family gatherings accessible and easy. The ability to be with family is maximized, bringing everyone closer, and some seniors provide child care to their grandchildren. The many benefits of grandkids getting closer to their grandparents is a greater understanding and appreciation of an older generation and a willingness to step in for care when needed.
Independence. Separate living quarters allow for an older adult to have their own space and privacy – affording a sense of independence and autonomy.
Affordability. In most cases a tiny backyard home will be much less than a single-family home. Options for ADUs vary depending on space and amenities. If as a family you decide to invest in an ADU for a loved one, you can charge a reasonable rent to offset your costs.
Safety. ADUs can be built with safety in mind, including single-level living, monitors, accessibility features like grab bars, walk in showers and easy access to areas in the kitchen.
Housing for caregivers (family or professionals). Most states require that if a professional caregiver is providing care overnight, they have a separate bedroom. If an older adult’s home can’t accommodate a living space for a caregiver, an ADU is an option. The other possibility is housing for a family member who is providing care in exchange for rent.
Added value to your home. An ADU can add value to your home, especially as more people become familiar with the benefits.
Less home maintenance. A much smaller ADU has much less home maintenance, and besides your family is next door to help you.
Zoning. Zoning for ADUs is a huge issue nationwide, with about 80% of neighborhoods permitting only single-family homes. But this is changing. AARP supports and works to pass legislation to change zoning to allow more ADUs. Even in communities that allow for ADUs laws restricting parking and owner occupancy requirements discourage people from choosing to build an ADU.
Community resistance. If your community zoning allows ADUs that does not mean your neighbors will be happy about it. You could encounter stiff resistance, some of it based on misguided information. Most single-family neighborhoods are concerned about an increase in rentals and traffic.
Care concerns. If an older adult lives in your ADU, there could come a time when they need more care than can affordably or safely be provided in their ADU. Your loved one may need to move to assisted living. If this happens, you are left with an empty ADU that you may need to rent to recoup your investment.
As the need for affordable housing for all age groups including seniors continues to grow, more communities are allowing zoning for ADUs. Ten states and the District of Columbia, as well as many municipalities, have adopted or revised laws to encourage ADU construction. Along with changing zoning laws communities are removing arduous barriers like approval processes and parking restrictions.
When California passed laws allowing the use of ADUs, permits rose from 1,200 in 2016 to 20,000 in 2021. Also, AARP has helped 17 cities including Louisville, Ky; Kansas City, Mo; and Denver pass laws allowing ADUs.
An ADU can be a significant financial investment. Work with your financial planner as you consider the cost/benefit ratio of adding an ADU to your property. Long-term care considerations should be part of any plan since the care needs of your loved one are likely to change over time.
Intergenerational housing is gaining steam. Why? Because many older adults are resisting the idea of being segregated with other older people. They want the diversity, energy and connection that younger adults bring to a living environment. Although older adults are primary home owners, a growing number of adults over the age of 65 are choosing to rent. According to the Joint Center for Housing Studies, the number of renter households headed by someone aged 65 or older jumped 43% from 2009-2019.
There are two main ideas that aim to mix generations in housing. One is apartment buildings that re-purpose to accommodate seniors while welcoming all age groups, and the other is single family cottages that allow for a percentage of younger residents. Let’s look at some companies that are investing in these ideas.
Upside Home renovates existing apartment and condominium developments and partners with multi-family homeowners, condominium and apartment complex property managers. Their apartments are in urban districts and have amenities such as elevators, in-unit washers and dryers, pools, parking and proximity to shopping and cultural events. Apartments are intergenerational and only available in some states. What if you need care and transportation? You can access a la carte housekeeping, transportation and companion services Upside Home provides.
The other housing idea is one where smaller modular or other cottage-type homes are built on a property and a certain percentage is allowed for younger adults. An example is Cantina Communities near Austin, Texas. The disadvantage of this style of housing vs. apartment living is the land needed for development that can add to the cost of renting or purchasing a home.
As with any housing choice, there are pros and cons of intergenerational living. Let’s explore the benefits and pitfalls of intergenerational housing.
Increased socialization. Social isolation for seniors is a significant health concern. Increased loneliness has been associated with depression, anxiety and exacerbation of medical problems. In intergenerational housing there is as much or as little social interaction as you want.
Diversity. Being around younger people usually means exposure to diverse ideas, cultures, ethnicity and backgrounds. The benefits are enormous from improved cognitive function to decreased loneliness and opportunities for reciprocal giving.
Security. When you live in a community, apartment or otherwise, you have a sense of security knowing you can reach out and that people care what happens to you.
Combating ageism. Ageism is a significant problem in the U.S.; stereotypes and misconceptions influence attitudes, legislation and support services. When differing age groups live together, there is an opportunity for dispelling stereotypes on both sides.
The ability for children or grandchildren to live in the same community. In the vast majority of senior communities, adults under the age of 55 are not permitted. If you have a younger relative who wants to live in the same building, they can.
Financial stability. Most older adults sell their homes to finance alternative housing. Renting can eat into your monthly income and assets. Unless you have substantial funds, plan for a need for increasing personal care as part of your financial plan.
Lack of services. You may not have easy access to personal care or other health-related services. What happens if you can no longer drive or have mobility issues? You will likely have to pay for those support services, increasing your monthly costs.
Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.