The Impact of Baby Boomers on Senior Living/Senior Healthcare

The oldest boomers are about to turn 80 in 2026. This age point is typically the trigger point for advancing needs in secure living environments, services increase (ADL and IADL support), and increasing healthcare consumption.

The baby boom generation is defined as folks born between 1946 and 1964. The “boom” reference is the rapid number of children born post World War II as soldiers returned home, married, and started a family. Boomers are one of the largest demographics (age defined cohorts) in history. Their maturation in large volume, into senior living/senior care consumers will create a large demand shift for the senior living and senior healthcare industries.

According to a publication from the National Investment Center (NIC) titled, “The Boom of Baby Boomers”, the main drivers for future care and living needs are,

• Boomers will live longer compared to previous age cohort groups. Longer lifespan increases the probability of living with chronic health conditions (dementia, arthritis, heart disease, diabetes, etc.).
• The ratio of caregivers to seniors is declining, increasing staffing and caregiving challenges.
• Affordable living options, especially senior-targeted, are limited now and given the costs of building and development, the ratio of units available to middle-income seniors that want the units is not likely to narrow or improve.

The full report/E-Book is available here: NIC-MAP-Vision_Ebook_Boom-of-Baby-Boomers

The typical “sweet spot” for senior housing move-ins is the early 80s (82 -84). Initial survey activities for possible moves begin proximal to 80. Boomers will move into this cycle in 2026 and then create demand acceleration across the next decade. 

The size of the 80+ and 85+ groups are expected to grow by 4.6% and 3.9% respectively, over the remainder of this decade. The 82-86 group is expected to increase by 3.5% for the next couple of years and then, accelerate to 5.7% for the remainder of the decade.  This group, especially the 85+ group, changes in demand from housing to housing with services to healthcare services, primarily, as age advances.

Because this group will demand and require, certain caregiver services, it is important to note that the ratio of workers to non-workers as a percent of the total population, continues to erode.  In other words, the non-working folk between 0 and 14 and then, 65 plus, is growing faster than the workforce participants in all other age categories. 

For example, in 2020, the number of non-working people grew by 13.1 million or a 12.9% increase over 2010. Over the same period, the working population grew by 6.4 million or 3.1%.  In addition to creating potential labor shortages, this demographic shift also creates tax support challenges for entitlement programs such as Social Security and Medicare.  More people are drawing supports than people working and paying tax supports into the programs.  This is one of the main reasons readers (frequent) will recall my constant call for entitlement reforms.

Without additional workers and in turn, caregivers, demand for services will go unmet.  Sources like Argentum (trade association) and the University of California that there is a need for 1 to 2.5 million more caregivers by 2030.  This of course, will be affected by retirements within this employment category, effectively moving the number potentially, higher.

By 2030, approximately 8.5 million people will have Alzheimer’s/Related Dementia. By 2040, the number jumps to 11.2 million.  The largest age cohort with this disease state are folk 85+ (more than half of the total). According to NIC data from primary and secondary markets that it tracks, there are currently 158,00 units, 83% occupied (131,500).  With the increases projected in age and the corresponding increase in dementia (Alzheimer’s), NIC estimates than an additional 50,00 units will be needed by 2030, an additional 110,000 by 2040, and an additional 142,000 by 2050. 

Looking at overall senior housing demand and population growth, NIC estimates that an additional 800,000 units will be needed to maintain current penetration levels (realized demand in terms of occupancy) by 2030. In dollars, this amounts to an additional investment in development of $400 billion. Today, about 40% of that investment is available or planned.  It takes roughly two years from start to finish, to develop a new senior living community or nursing home.

Looking at the senior living and care industry as a whole, four sectors stand-out.  First, lifestyle community demand is accelerating. This is middle-income and above housing, typically with concierge services but no direct care. 

Second, Assisted Living and Memory Care will continue to see rapid demand, primarily to accommodate the acceleration of service needs driven by dementia and other lifestyle, chronic diseases.  The challenge with realizing unit sufficiency to meet the demand increase will be staffing – sufficient number, sufficient skill levels.

Third, affordable housing demand will remain high and potentially, significantly increase based on whether the U.S. economy enters a period of recession in 2024 followed by stagflation (persistent higher inflation, low GDP growth).  Construction and development costs have increased dramatically pre and now, post pandemic.  Government policy in the form of tax credits and other lower costs lending facilities will need to grow and improve if additional unit increases are at all possible to meet rising demand.

Fourth, home care and home health services will continue to be in high demand.  Policy changes and shifts that incentivize care at home, including acute care and higher acuity care, are driving home health demand.  Home care (personal care) is also on the rise as seniors prefer in-home ADL assistance (cheaper), than facility-based care.  Again, the challenge to meet this demand is labor – amount and skill set thereof.