Massive Mortgage Cost Spike Leaves America's Elderly With Difficult Choice

America's elderly are cornered into making a daunting choice. Either retire amidst financial uncertainty or continue grappling with soaring housing costs against an unprecedented spike in mortgage debt.

A study released Thursday by Harvard University's Joint Center for Housing Studies found a 423 percent increase in median mortgage debt for homeowners aged 65 to 79. It marks a shift in the retirement landscape where a debt-free golden age is no longer a guarantee.

With the median mortgage debt for the demographic ballooning from $21,000 in 1989 to $110,000 in 2022, America's retirees face the reality of financing their post-work years on increasingly strained budgets, Harvard's study said. The surge in debt is compounded by the lack of accessible housing and the soaring costs of long-term care, which now averages over $100 a day.

Newsweek has reached out to Harvard's Joint Center for Housing Studies via email for comment.

As older homeowners increasingly dip into their equity to make ends meet, the Harvard report said there is a pressing need for U.S. housing policy to adapt swiftly to prevent a looming crisis of financial insecurity among its aging citizens.

Older Americans Grapple With Housing

As the number of older adults in the U.S. soars, reaching 58 million in 2022 from 43 million in 2012, the financial vulnerability they face is becoming increasingly evident. The Harvard report found that nearly 11.2 million older adults—particularly those over 80—are grappling with housing cost burdens, with more than 30 percent of their income going towards housing expenses. The situation is particularly tough for households dependent on Social Security with annual incomes between $15,000 and $30,000, leaving them with just $1,000 per month to cover other essential expenses after housing costs, the report said.

Further complicating the financial challenges are rising utility and insurance costs. The Harvard report cites that in 2020, nearly 7 million older households reported forgoing essential needs like food or medicine to pay utility bills.

That is a challenge exacerbated by a shortage of accessible housing options, Harvard found, with less than 4 percent of homes in the U.S. offering key features for the elderly like single-floor living and no-step entries.

The report also highlights disparities in cost burdens by income, race, and ethnicity. Older Black and Hispanic households face the highest rates of cost burdens, with around 44 percent of these populations experiencing severe housing cost burdens. In contrast, 30 percent of older white households face such burdens.

Cost burden disparity is even more pronounced among older adults living alone, who are more likely to face financial strain compared to those in married or partnered households. The squeeze on expenses is pushing a growing number of seniors towards tough decisions—either cut back on essential needs or seek alternative living arrangements, like cohabitation or downsizing.

Even more, Harvard said property insurance premiums have escalated due to climate-related hazards. States that have traditionally attracted retirees with their warmer climates are now facing extreme weather conditions, the report found, leading to property damage and more financial pressure on the elderly, many of whom are already uninsured or underinsured.

With federal housing assistance falling short for a significant portion of the eligible elderly population, the report raises questions about the adequacy of government assistance in addressing the challenges. Harvard calls on the urgent need for policy interventions and creative solutions, including expanding access to affordable housing, offering more robust long-term care options, and devising innovative financing mechanisms for older adults.

As America's elderly population continues to grow, so does the urgency to address the issues of housing affordability, accessible living arrangements, and adequate care, the report said.