The senior housing industry is making a consistent mistake.

They are overestimating demand. They are overestimating demand by including in their estimated target market younger seniors that rarely buy into CCRCs. Boomers are waiting longer than prior generations to consider senior living options.

Boomer Entry Age

Full-service senior living communities offer a continuum of care from Independent Living through Skilled Nursing. These communities are known as Continuing Care Retirement Communities (CCRCs). The industry’s new marketing lingo for CCRCs is Life Plan Communities. CCRCs are typically organized as restricted-age communities limited to residents over 62 or 65. Despite all the advertising emphasizing active senior living, the real entry age is often later than the entry minimum. The true average entry age is older by decades not years. What will be the boomer entry age? Will boomers choose to enter CCRCs at all?

Too many business plans are based on marketing plans targeted to anyone age-70 and over. Back in the day that use to be a good number. But it no longer reflects the reality. Age-80 and over is a better estimate. That’s the new market when care becomes a question. Perhaps a health crisis rings the bell. Regardless, the average age of entry into a CCRC is going up, not down. It varies by the community. New communities can attract a younger demographic. But the mid-80s is often a community’s average age of entry. That means new residents are already frailer than many communities planned.

The Big Three

Three things are working against the traditional model geared to attract 70-year olds.

  1. Changing consumer behavior. Yes, there’s a big demographic wave of baby boomers hitting retirement. The front of that wave born right after WWII is turning 70. But they are not behaving like their parents. They often aren’t even retired at 70. Many don’t even plan a hard stop to careers. They expect to live longer, retire later and have a strong preference to age-in-place.
  2. Greater economic uncertainty. The Great Recession and a shrinking middle class hit the baby boomer generation hard. The boomers have relatively smaller retirement nest eggs than their parents. Most are invested in stock-market-driven 401Ks. Earlier generations had more predictable cash flow from defined benefit pensions. Baby boomers are conscious of this volatility in their paper wealth. A volatile stock market and volatile home values mean boomers are twice burned. Boomers are therefore more reluctant to lock-up assets or cash flow with a hard to reverse commitment.
  3. Rising prices. Overall inflation may be low. But healthcare is inflating faster than other costs. It is inflating often at two or three times the rate of wage growth or the catchall Consumer Price Index’s (CPI’s) basket of household goods. CCRCs package real estate, hospitality and care together in a bundled price. As the cost of healthcare and caregiving goes up, so does the cost of CCRCs. We think CCRCs have an affordability problem. Their traditional age-70 target market perceives they can’t afford what CCRCs are offering. The can’t afford it at least until they’ve exhausted the perceived less expensive and more flexible age-in-place strategy.

That leaves the industry scrambling after the upper end of the wealth and income scale, a race not everyone can win. Building for the Social Security dependent senior market is a challenge. 

We are surprised how little has changed in this industry over the past thirty years. Yes, the back office management is now digital, but what residents see is remarkably the same. Even the architecture often seems locked in amber. Classically inspired formal decor appealed to the Camelot generation. But baby boomers like open floor plans and informal decor. Perhaps senior living communities shouldn’t look so much like funeral parlors if boomers are the new wave.

Too many communities are missing the changes in senior consumer behavior, preferences, and tastes.

What will be the boomer entry age?

We think something has to change. Perhaps the continuum of services begins while people are still living in their “age-in-place” homes. Perhaps the socially required scale of private space changes, as in the Tiny Home movement. Perhaps consumers choose less care in their last phase of life. Or perhaps they consume both healthcare and assistive care in less expensive venues. Something has to give. Baby boomers are not going to buy the exact same thing their parents wanted. So will there be a boomer entry age?

What’s your experience as a consumer? As a community?