Millennials could soon see their parents become their biggest expense–and American families are woefully unprepared

A retirement affordability crisis is escalating in the U.S. Three out of four middle-income older Americans won’t have enough to pay for assisted living services without selling their homes within a decade, according to data analyzed by NORC at the University of Chicago, supported by a grant from The SCAN Foundation.

Baby boomers–a massive generation–are moving into older adulthood. NORC found that there will be 16 million middle-income older adults by 2033. As NORC’s research summary explains: “Many will struggle to pay for the health, personal care, and housing services they need. … Even with home equity, nearly 40% will not be able to afford assisted living.”

Rethinking risk

These expenses have become more onerous for older Americans over time. In 2002, adults over 65 spent $48,000 (adjusted for inflation) a year on average, according to data from the Bureau of Labor Statistics. Today, the average is $58,000, a more than 20% increase. The average rent and medical costs for those in assisted living currently stand at $65,000 a year.

As noted in a Harvard University report, “In 2021, older households with annual incomes between $15,000 and $30,000 had a median of $1,000 per month available to cover other expenses after paying for housing. Those earning less had incomes that, on average, were insufficient to meet their housing costs, to say nothing of other basic needs.”

Racial disparities are only compounding this situation, with people of color experiencing more financial hardship as they age.

Most people want to see their parents stay in their own homes. The same goes for their parents: 89% of Americans over 55 want to age in place, according to a survey by Today’s…