[Important update: In the initial version of this post, I mistakenly stated that this Board committee was being recruited for. Actually, the recruiting has already occurred. Richard King and Robin Van Doren are our representatives. I apologize for confusing this recruitment effort with a different one. Thanks, Ruth Greenberger, for correcting me.]
The Kendal-Crosslands Communities (KCC) Board has just gotten two Kendal residents to serve on its “Attainable Housing Committee”. But what does “attainable housing” mean, and why is KCC interested in it? I have no insights into the Board’s thinking, but I do follow some of the retirement-industry websites, and I imagine the Board is considering the ways it could serve what the industry calls the “middle market”.
The middle market, in industry terms, is the great majority of Americans who aren’t wealthy enough to afford Kendal or a similar CCRC/LifePlan community. If KCC sees its mission as providing retirement options for more than just the well off, it will have to find a way to address that middle market.
Kendal, like other CCRCs, is expensive. I have been looking at statistics about home ownership, retirement savings, and pensions. It appears to me that less than 20% of Americans reaching retirement age have the financial resources to qualify for even a small residence at a place like Kendal. And there is reason to think that percentage will decline further.
Let’s look at some of the financial resources that have allowed current and past Kendal residents to qualify.
Selling a house. For many residents, the sale of a house has represented a major component of funding their Kendal retirement. But owning a home outright is less common now than it was a few decades ago. The AARP reports that only 56% of homeowners now retire with their mortgage fully paid off. That suggests home equity is likely to a declining factor in financing a Kendal retirement.
A pension. Company pensions, which used to be fairly common, are now rare in private industry. Unless you hold a government job or are a member of a strong union, you are not likely to get a pension. These days, most Americans of retirement age do not have any pension income. But having a pension is a huge advantage when Kendal evaluates your financial eligibility, an advantage that far fewer applicants will have in the future.
Retirement savings accounts. As they have phased out pensions, companies have often shifted the burden of retirement planning onto employees, in the form of retirement accounts such as IRAs and 401(K)s. But many people can’t afford (or have not chosen) to fund their retirement accounts adequately. Many employers do not even offer a match of contributions to retirement accounts. A Motley Fool analysis of Federal Reserve data showed that the median US resident in the 65-74 age range has just over $160,000 in retirement savings. Even if both members of a couple have that level of savings, it won’t be enough to qualify for Kendal in most cases. In fact, according to BusinessInsider, 80% of 71-75-year-olds have less than $1 million in assets—which means they probably can’t afford Kendal.
Social Security income. Social Security was never intended to be the primary source of retirement income. It helps, of course, but it doesn’t begin to cover Kendal’s fees. According to BankRate, the average worker retiring in October 2022 got $1,676 per month in Social Security payments.
Ed Plasha (our CFO) tells me that a single, 75-year-old woman would need $1 million in assets, plus $3500/month of Social Security to qualify for a one-bedroom Kendal cottage. Her life expectancy here would be 17 years (a year or two less for male residents).
Looking at the picture painted by the statistics above, it’s clear that most US retirees will not have the resources to afford Kendal. The typical retiree, with $160,000 in assets and $1,676/month from Social Security, would not come remotely close to meeting the requirements Ed lists.
Even for those who have been careful about exploiting every opportunity to fund their retirement, Kendal is increasingly out of reach. The trends suggest that future cohorts of retirees will be even less likely to afford Kendal.
The “attainable” option. If KCC wants to offer something that the “middle market” can afford, it will have to be quite different from Kendal and Crosslands. It will probably not be a CCRC, with assisted living and skilled nursing incorporated in the regular monthly fee.
- Would it have some assistance with health care (such as a “health concierge” to help with medical appointments and prescriptions and to make sure meds are taken)?
- Would it perhaps be a conversion of an abandoned industrial building, close to in-town amenities? (Kennett Square has some potential sites of that kind.)
- Might it be a multi-generational facility, incorporating both family housing and retirement facilities?
- Could it have a performance space, usable for community events as well as for residents?
- Might it be highly sustainable, with solar panels, good insulation, and efficient appliances? (That would make it inexpensive to operate, as well as being a point of pride with residents.)
- Might it make services available, such as cleaning and shopping, for a low fee?
Most likely, you can come up with many other possibilities.
Suppose that, in addition to features like these, the new facility could manage to incorporate the spirit and values that have made Kendal such a special place. This could be an opportunity for Kendal to pioneer new ways to retire, just as it has done over the past 50 years.
Whatever shape attainable housing might take, it seems unlikely to me that it would be constructed directly on the Kendal-Crosslands property, with shared facilities. I would fear “us-vs-them” conflicts between residents of the two kinds of communities.
But there is clearly a need for retirement options for Americans retiring now who can’t afford a place like Kendal, and the even greater percentage of future retirees who will be in the same boat. What, if anything, can KCC offer them? This, I imagine, is the question that the “Attainable Housing Committee” of the KCC Board will have to wrestle with.