A planned 70-unit active adult community in Northampton is designed to make the math work for cash-poor seniors seeking to downsize and sell their homes. Image courtesy of BKSK Architects
The largest expense for the average American is housing, and the second largest is transportation. While these are often considered separately, they should not be, particularly when one is moving to save money. And, whether they know it or not, tens of millions of Baby Boomers will have to move soon to save money.
In 1935, when Social Security started, the longest average lifespan was 65, for white females. By 2021, this has expanded to over 79 years. An average of 10,000 Americans reach the age of 70 every day. Here’s their financial situation, according to data from the Federal Reserve and Social Security Administration: median savings of $165,000, average monthly Social Security of $1,542 and median home value of $450,000. Almost 80 percent own their homes.
About 29 percent signed up for Social Security at age 62, the earliest possible time with the lowest possible rate. Only 6 percent waited until 70, increasing their check by 8 percent for every year they waited. The bright spot for many is home ownership. Those with a fully paid-up home have an asset almost three times larger than the median savings.
Nearly 90 percent of adults over age 50 – across all age, race, income and health status categories – want to remain at home and “age in place,” according to research by Capital Caring Health. But most of them have not faced up to their financial reality. With median savings of $164,000 and monthly income of $1,542, even if they own their home outright, how will they pay for real estate taxes, home maintenance and repair, heating and cooling and automotive expenses?
Here’s the bottom line – the vast majority of them will run out of money if they try to do so. So it’s time to sell that $450,000 asset and downsize.
Parallel to the savings crisis, there are the unintended consequences of single-use zoning. The average suburbanite must use their car for practically all daily errands. The suburban lifestyle has three important negative consequences: increased carbon emissions, social isolation and less physical activity.
For those who remain in their homes through retirement, there is another grave consequence – outliving one’s ability to drive, often when otherwise in good health. According to an AAA study, this averages from seven to 10 years. The people affected can no longer be self-sufficient.
A Sustainable Solution in Secondary Cities
One possible solution to all these problems is active adult, 55-plus rental housing in walkable, bikeable neighborhoods, particularly in secondary cities with lower land costs. Not only can people reduce their housing costs, but they can also cut automobile costs, increase their physical activity, and become more socially active, not only in the building they live in, but the larger community, as well.
Before the ascent of the automobile and the flight to the suburbs, most people grew old in extended family settings. Elders were respected for their wisdom counsel. Roman orator Cicero stated: “For there is assuredly nothing dearer to a man than wisdom, and though age takes away all else, it undoubtedly brings us that.” Giving back to the community not only benefits the receiver, but the giver, as well. Scientific studies have confirmed that a sense of purpose leads to a longer, healthier and certainly more joyful life.
David Fox
The pilot project of my development company, Live Give Play, is a 70-unit active adult building close to the center of Northampton. Our all-electric structure will meet Passive House standards, cutting our tenants’ heating and cooling costs by up to 80 percent. The 79 King St. project will have 10,000 square feet of solar panels on the roof, and offer shared electric cars to tenants, allowing them to forego car ownership if they desire. It will also have self-imposed rent stabilization, limiting annual increases to the greater of 3 percent or the cost of living allowance of Social Security. The LiveGivePlay team will be working with local colleges, businesses and nonprofits to provide mentors and volunteers.
While we’re looking to start construction next spring, we already have 55 people on our wait list. This is before we start any marketing efforts, save for an initial publicity campaign announcing the project. We have no doubt that there are millions more all over the country waiting for a similar opportunity in towns and cities near them.
David Fox is founder and CEO of Live Give Play LLC.
