The Center for Retirement Research has produced a study on income inequality among America’s aging seniors that may provide food for thought for senior housing/healthcare owners and operators who serve this growing population.

‘The Center’s study reveals that more than half of older Americans with the lowest socioeconomic status can expect to face an income gap if they retire when they’re planning to,” says Cambridge Chairman Jeffrey A. Davis.

In their report, the researchers quantified and compared the gaps in the retirement preparedness of more than 3,000 older U.S. households grouped by four levels of educational attainment.  They then estimated the target income that each working household will need in retirement to maintain its current standard of living.

The researchers figured that target income will be less than current income from working, because retirees no longer need to save money and they pay less in taxes. So they projected the income each household will actually have – at each different retirement age – from the retirees’ Social Security, employer retirement plans, regular savings and home equity.

When a household’s projected income reaches the target, that’s the age at which they can expect to retire comfortably.

But the researchers point out that people don’t necessarily make decisions that are in their best interest.  The study showed that 54 percent of those in the least-educated group will face an income gap if they retire when they said they’re planning to, compared with 36 percent of the best-educated group.

Mr. Davis says retirement experts, including economists at the Center, urge baby-boomers to hold on and work just a few more years to improve their retirement finances.  But the less-educated older workers often have physically demanding jobs or poorer health, making this very challenging or even impossible.

The study concludes that it may well be true that their retirement shortfalls cannot be bridged by working longer, which means other solutions will be needed, Mr. Davis said.

“It doesn’t take a quantum leap to project these numbers onto the cohort of seniors who will need to avail themselves of services that only the senior care industry can provide.  More than half of the less-educated seniors move into their projected retirement age with an income retirement gap and, surprisingly, more than one in three in the best-educated group find themselves in this position as well.

“Looking ahead, the senior care industry will continually be challenged to put the brakes on rising costs,” he added.

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