Amid rising inflation, a sharp downturn in the markets, and ongoing impacts of the pandemic, millions of older Americans are navigating a highly unusual economic landscape. At the same time, the Federal Reserve reports that the median home price jumped by more than $100,000 from the middle of 2020 to the beginning of 2022—good news for homeowners, but troubling for those looking to move or buy. And it’s all playing out within a wider paradigm shift brought by modern longevity, transforming how people approach their later decades.
Bank of America’s latest report, Housing in retirement: Your life, your choice, offers a critical update for older adults who are making housing and other financial decisions in this new environment. It adds to Bank of America’s long track record of pioneering research on the financial aspects of modern longevity, recognizing that how we plan, save, invest, and spend must evolve for a world where lifespans routinely stretch into our 80s, 90s, and beyond.
The new report reflects key changes to the period after traditional retirement age, when people are pursuing new priorities and opportunities for fulfillment, contribution, and impact. As Cynthia Hutchins, Director of Financial Gerontology and the report’s author, states in the introduction:
“The U.S. population is growing older and living longer than ever before, transforming our society, health care and retirement systems, and expectations for our later years. With increasing longevity, the retirement landscape has changed dramatically. The mindset of today’s retirees has shifted from living a life of leisure for however many years were left, to pursuing new dreams, new goals and new passions, and making the most of what could be a 20-, 30- or even 40-year retirement.”
Of course, this has important implications for where and how older adults live. Rather than the outdated idea of the gated retirement community, the report presents a far more dynamic picture, as older adults tailor their housing decisions to their individual preferences, needs, and priorities. Some will choose to move closer to family members or to more age-friendly communities, while others will place a premium on aging in their current home. Some may downsize and travel more, while others may “upsize” and live with multiple generations. And some may want that gated community, after all.
In short, just as no two people are alike, no two retirements are alike. In fact, some might not be retirement at all, at least not in the traditional sense, with many choosing to stay in the workforce, volunteer, or launch second careers. In a similar vein, the report reflects several areas where we must update societal and financial planning assumptions for the new longevity landscape:
- This is not your grandfather’s retirement. Instead, what’s emerging is far more interesting: a new stage in life, where people pursue their passions, start new ventures, volunteer, travel, and spend time with family. In short, people are using this period to focus on whatever is most meaningful for them, often for decades after 60 or 65. Throughout it all, they will need to shift their living arrangements to match their preferences for community, functional ability, financial resources, and other key factors.
- Older adults are a diverse, vibrant demographic—not a monolith. So, rather than prescribe a one-size-fits-all solution, the report outlines a number of factors, challenges, and potential solutions that older adults can consider and adapt to their needs. At the center of it all is a simple but profound goal: building the health, wealth, and community to live well for as long as possible, with a person’s home playing a central role.
- Healthy aging is inextricably linked to healthy finances and housing decisions. The vast majority of older adults want to age in their own home, but achieving this goal requires remaining healthy and independent, potentially with support from home care services. In fact, 65% of older adults receiving care choose to receive it in their own home. This, in turn, has important financial implications. Home care services are significantly less expensive than residential long-term care, as the national average cost of a private room in a nursing home facility is now nearly $9,000 a month.
Understanding this new aging landscape now reflected in the WHO/UN Decade of Healthy Ageing is essential not only for older adults and their families, but also for the employers, policymakers, and organizations who serve them. 20th century retirement norms have grown outdated, creating a need to update everything from retirement plan design to workforce strategies to urban planning. The latest report from Bank of America offers an important resource for individuals, organizations, and leaders, as we pursue the new possibilities of modern longevity.