We’ve published several recent posts that have attracted attention, including one about the expanding market for luxury retirement communities and another about the rise of affinity retirement communities. Yet it’s equally important that the senior living industry design solutions for the “Forgotten Middle” — middle-income retirees who earn too much to qualify for financial assistance, but may struggle to afford retirement communities or the long-term care they could need. Several familiar companies are now testing concepts aimed squarely at this underserved middle-market senior living segment.
Sizing up the “Forgotten Middle”
The National Opinion Research Center (NORC) at the University of Chicago is an independent research organization that analyzes key social and economic trends. NORC’s original “Forgotten Middle” study was released in 2019 and updated in 2022 to reflect more of the Baby Boomer cohort, who will be ages 69 to 87 by 2033.
Key findings from the study include:
- Between 2018 and 2033, the population of middle-income older adults age 75 and up is expected to grow by 7.5 million (89%), reaching 16 million.
- Among middle-income seniors, more than half are projected to have three or more chronic conditions (54%), 56% will have mobility limitations, and nearly a third (31%) will experience cognitive impairment.
- By 2033, it is anticipated that 72% of these middle-income older adults (11.5 million people) will have less than $65,000 in annual income and annuitized assets (excluding home equity) — roughly the projected yearly cost to privately pay for assisted living.
>> Related: Senior Living and Care Industry Must Create Solutions for Middle-Income Seniors
The high cost of care hits middle-income older adults
Not everyone will need long-term care such as assisted living or skilled nursing, but the likelihood is significant. The U.S. Department of Health and Human Services estimates roughly 70% of people over age 65 will need some level of long-term care during their lifetime.
One of the more troubling projections from the NORC study is that even when home equity is included, by 2033 an estimated 39% of middle-income older adults — about 6.1 million people — will lack sufficient financial resources to privately pay for assisted living.
Who will provide care for those who cannot afford it? Much caregiving is unpaid, delivered by spouses or adult children. Yet the study predicts that by 2033 a majority of older adults will be unmarried and fewer will have nearby adult children. That trend points to growing demand for paid caregivers and further upward pressure on the cost of care.
For the full analysis, consult the NORC Forgotten Middle Study 2022 update.
>> Related: The Long-Term Impacts of Fewer Births and More Soloagers
Innovating middle-market senior living
Affordability is central to retirement planning and senior care. The NORC findings clarify the growing affordability gap facing middle-income retirees and the providers who aim to serve them. New, practical solutions are needed so middle-income older adults can live comfortably—whether aging in place or moving to a community that fits their budget and care needs.
Necessity often drives innovation, and several private-sector players are already experimenting with concepts tailored to the middle market.
>> Related: Many People Underestimate Their Future Cost of Care
One-stop-shop … and live … at Costco
Costco has long been a one-stop destination for bulk goods and services, so extending into housing is a logical next step. The emerging “Costco Apartment” model envisions mixed-use multifamily housing located adjacent to or near Costco warehouses. One of the early projects is under development in Los Angeles, a market desperate for more affordable options for seniors and other middle- and lower-income households.
Costco Apartments aim for competitive rents while offering walkable access to Costco’s wide range of affordable products and services — groceries, household goods, pharmacy, eyewear, and more. Costco has also expanded member benefits to include low-cost virtual healthcare through Sesame, offering virtual primary care visits, standard lab panels with follow-up, and mental health visits at reduced prices. While these telehealth services are not a substitute for long-term or skilled nursing care, they demonstrate how bundled, low-cost services can support middle-market health needs.
Combined with public transit access, low-maintenance units, and amenities like pools and storage, the Costco Apartment concept could be an attractive downsizing option for budget-conscious older adults.
>> Related: How Retirement Income Affects Senior Living Affordability Calculations
Amazon eyes adding middle-market senior living to their menu
Amazon is also testing affordable housing solutions, including communities designed for older adults, through its Housing Equity Fund. The company has committed $2 billion to preserve and create affordable housing in three focus regions: the greater Washington, D.C. area; Nashville; and the Puget Sound region.
One Amazon-backed project, The Residences at Benning Road in Washington, D.C.’s Ward 7, is an affordable assisted living community that will provide 157 assisted-living apartments for qualified older adults and Medicaid-eligible residents. Located within a block of a metro station, the development aims to combine affordability with transit access and supportive services.
Amazon’s experience with projects like The Residences is informing scalable design and operational strategies that can reduce development costs, attract investors, and support long-term viability. The company also emphasizes the importance of recruiting and retaining quality staff as a critical factor in successful senior living operations.
Do the big boxes hold the keys to the future of senior living?
The NORC “Forgotten Middle” study makes clear that demand for affordable middle-market senior living and care will grow as Baby Boomers age. The industry needs practical, cost-conscious models that serve this expanding demographic.
With major retailers such as Costco and Amazon exploring housing and senior living concepts, other large organizations may also evaluate the financial feasibility of middle-market senior living. Whether future entrants include other retailers or partnerships among established chains, these experiments could broaden affordable options for older adults and help close the gap for the Forgotten Middle.