Action Project

Madison seniors struggle with cost of living increases

Madison's seniors look to the city government for possible solutions for the rising cost of assisted living after retirement.

Madison's seniors look to the city government for possible solutions for the rising cost of assisted living after retirement.

Image By: Courtesy of Capitol Lakes Social Media

When a newly employed person’s first paycheck arrives, envelopes holding retirement plans and senior living saving solutions accompany it. It is something individuals are expected to start thinking about — and saving for — from the time they receive their first steady job. However, the price of these facilities is increasing drastically.

Evidence appears particularly in assisted living facilities, residential arrangements providing personal care and health services to those who require them. The level of care is not as extensive as that of a nursing home but provides an intermediate level of long-term assistance.

The national median monthly rate for assisted living services is $4,000 a month, according to the Genworth 2018 Cost of Care Survey. The report listed that this price is almost 10 percent higher in Madison, at $4,363 a month, slightly above the state median price of $4,300.

There has been a 67 percent increase in the number of assisted living facilities since 2004, according to the survey, and the price could increase up to 55 percent in the next 15 years.

How older adults pay for senior care depends on their finances and level of services they need. The Wall Street Journal reported many seniors depend on numerous sources of funds, like personal savings, home equity, long-term care insurance and government benefits.

Matt Wachter, manager of Madison’s Office of Real Estate Services, said senior housing is not much different from the rest of the market. He serves on the Housing Strategy Committee, created by the city just over five years ago and dedicated to identifying and understanding patterns in the housing market.

Due to increased construction costs (which the committee found go up 7 to 10 percent a year in Madison), labor shortages and increased material and land costs, just providing buildings themselves has gotten more expensive across the board.

He and the committee — consisting of a broad swath of experts from academia to private real estate to not-for-profit workers — found some senior homeowners have more financial possibilities due to significant assets in their homes.

However, there is also a large population of elderly renters who are cost-burdened at a high rate due to living on a fixed income. This subsection of the population experiences unique challenges when it comes to affordable housing.

“There used to be a number of federal programs which dealt with [affordability],” Wachter said. “Public housing used to have a senior-focused track. Well, federal programs have changed over time so that we're not really building new senior housing.”

The U.S. Department of Housing and Urban Development funded programs for affordable senior housing, which were not funded, or were funded at a very low level for many years, Wachter said. As a result, new HUD-supported senior housing developments were not widely built.

Section 42 Tax Credit Program follows a similar model, providing competitive tax credits so developers can apply for specific, requested projects. For many years, there was a strong preference in the program toward family housing, Wachter explained, and senior housing was not built because it never scored competitively.

Madison’s government has worked with state counterparts in the housing agency to make the case that there is a need for affordable senior housing and to create an alternative scoring path for senior projects, Wachter said.

“Whereas five years ago it was all family, in the last two years we've seen one project a year of affordable senior housing for every three family projects,” he said. “The city took a pretty active role in one case where we actually acquired a site and put out a request for qualifications to find a senior formal housing developer to develop on that site.”

The site, located in the West Side on Tree Lane, should begin construction in 2019. The facility will house seniors with mixed incomes and provide a variety of services.

When it comes to affordability of senior housing, real estate is only half the equation. The other half of the issue is equally as intricate: healthcare.

Wisconsin Association of Assisted Living CEO Mike Pochowski, the largest health provider association representing assisted living communities across the state, has been keeping an eye on healthcare prices for seniors.

“We're always definitely concerned about any type of price increase that could happen for the residents that live in our communities,” Pochowski said. “I think with healthcare in general, costs are rising and so we're always trying to figure out ways to address the affordability issue, particularly with the baby boomers coming of age [and] retiring and looking to potentially move into assisted living communities.”

Frequently, people will sell their houses or assets in order to afford space in an assisted community, Pochowski said. However, some seniors do not have such assets to sell, leaving them short on money for retirement. Part of WALA’s mission is to help these seniors afford retirement housing.

“We’re working with the Wisconsin Department of Health Services, which is the licensing agency for assisted living communities, to find ways to make [assisted living] more affordable and, in particular, try and have more increased reimbursements within the family care program, making sure that those costs can be offset to some extent,” Pochowski said.

WALA is also collaborating with Argentum, a national trade association which provides choices for various aspects of senior living, to educate the public on the increasing costs of senior living and various ways to save up by working, according to their website.

“There are costs associated with any type of environment that [seniors] might live in, and particularly when health care is involved,” Pochowski said. “We're aware of these concerns and looking to help not only our membership but also the general public to make sure that everyone is prepared and knows what to expect when moving into an assisted living community.”

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