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Middle-income seniors risk falling through the cracks in the housing market

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WASHINGTON — Mary Gerace has lived here since 1963 and loves it. But at 73, she worries that someday she may become too frail to stay in the rent-controlled third-floor walk-up apartment where she has lived for 42 years. Then, she fears, she won’t be able to afford to remain in the city.

‘‘I’m fine now, thank goodness, but a surprise fall or a serious illness could change that,’’ said Gerace, who retired three years ago from working in human resources at a small company. The low rent on her apartment, which she shares with her brother, enables her to own a car, eat out sometimes, and take occasional day trips.

But local senior housing facilities she has looked into cost many times more than what she now pays, and far more than her savings would cover. ‘‘As I look around the Washington area, I realize that I’m going to have to look outside of here,’’ possibly to another region of the United States, she said.

In the next decade, the number of seniors who are middle-income is projected to soar, and a large share of them will be unable to afford housing and care, according to a recent study published in the journal Health Affairs.

Over the past 40 years, the housing market for seniors has expanded widely, but new development has focused largely on higher-end facilities, said the report, which used data from the Health and Retirement Study, a national longitudinal study of people fifty and older sponsored by the National Institute on Aging and conducted by the University of Michigan.

Seniors who have too much income to qualify for government-subsidized housing and don’t make enough to live in a luxury development will be left behind. That could end up costing the government more money, said Beth Mace, an author of the study and chief economist at the National Investment Center for Seniors Housing and Care.

‘‘The fear is that if they’re not served, they’ll be required to spend down to Medicaid, which will put more pressure on our Medicaid coffers,’’ she said, adding that the left-behind segment will include ‘‘schoolteachers, firefighters — the basic labor force.’’

By 2029 the number of middle-income seniors is projected to nearly double, from 7.9 million to 14.4 million, said the study. (It also noted that after 2029, as the baby-boom generation age into their late 80s and 90s, the number of seniors needing additional care will grow even more dramatically.)

The study defines middle-income seniors as people 75 to 84 who have between $25,000 and $74,000 a year, or between $25,000 and $95,000 a year for those 85 and older. Of those, 20 percent are projected to be ‘‘high needs’’ (having three or more chronic conditions and difficulties with one or more daily living activities) and 60 percent will have mobility limitations that may prevent them from living independently.

For those without homes to sell or borrow against, the outlook is bleak: In 2029, 81 percent of middle-income seniors without equity in housing will have an annual income that is below the projected annual $62,000 for assisted-living rent and estimated out-of-pocket medical spending, the study found. For those who do have housing equity, the numbers are still sobering: 54 percent will still be unable to pay for senior housing, the study found.

‘‘Even if we assume that seniors devote 100 percent of their annual income to seniors housing — setting aside any personal expenses — only 19 percent of middle-income seniors will have financial resources that exceed today’s costs of assisted living,’’ it said.

The situation is the result of a perfect economic, sociological, and policy storm that has been brewing for several decades. More Americans live alone than in the past, and family sizes have shrunk, requiring people to be more self-reliant as they age. At the same time, life expectancy has risen, pension plans have become less common, and real estate prices have soared.

In metropolitan areas such as Washington, D.C., where the cost of living is higher than the national average, the problem is especially acute. The region has some perks for older people, such as public transportation and a wide network of senior villages to help people age in place.

But here and in other metro areas, new housing is often geared toward high-earning younger people, and few homes have design features that would allow older adults to age in place, such as wheelchair accessibility and levers instead of knobs, said Elizabeth White, author of ‘‘55, Underemployed, and Faking Normal: Your Guide to a Better Life,’’ a book about older adults in financial jeopardy.

‘‘The suppliers are not yet responding to the market,’’ White said. ‘‘You should be able to design a 300- to 400-square-foot space that is affordable rather than what is now on the market, which is generally targeting affluent millennials.’’

The lack of affordable housing is a central concern for participants in the Aging Solo classes offered by Iona Senior Services, a nonprofit serving the D.C. area.

‘‘I can feel the tension rising’’ when the subject comes up, said Susan Messina, the organization’s deputy director. ‘‘People talk about how ‘I can’t afford the Inglesides’ — a higher-end facility with multiple locations in the Washington area — ‘but I don’t qualify for subsidized housing.’ ’’

Some senior residences require a six-figure initial buy-in just to move in, which residents often pay for by selling their homes. But for renters that is not an option, and for many homeowners, too, it is out of reach.

Some are finding creative solutions, such as moving in with friends or taking in boarders.

After their retail businesses collapsed during the 2008 recession. Susan Mitchell, 74, and her husband started renting out rooms in their house near American University, where they have lived for 32 years. They plan to continue doing so as long as they are in good health.

But if that changes, she said, they don’t know what they will do. If they were to need significant medical help, they worry the options in the area would be largely out of their price range.

‘‘We might have to go to a smaller town where I believe it’s more affordable,’’ said Mitchell, who used to work as office manager for their stores. She added, ‘‘We have — sort of in jest, sort of not — talked about having a commune with people we know.’’

Mace said she hopes the study will spur policy makers and developers to be more creative, too.

For example, the study said, jurisdictions could offer incentives for developers to build more basic, less expensive housing and include lower-income housing in higher-end projects; senior housing could be structured to more formally involve family caregivers and other community members to offset staffing costs; Medicare could expand to cover more services; or Medicaid could widen its eligibility and coverage areas.

‘‘Our hope is to try and create the beginnings of conversations on solutions,’’ Mace said.

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