What’s Driving Demand for Senior Care Services?
It should come as no surprise that the Baby Boomer generation is the number one factor behind the home care industry’s rapid growth. Today, roughly half of all Baby Boomers have reached retirement age. What’s more, older Baby Boomers are reaching the age when many seniors develop long-term care needs.
In addition, American families are increasingly taking steps to help older family members age in place — a strong preference for the vast majority of U.S. seniors. At the same time, government programs are increasingly investing in at-home caregiving, helping seniors remain in their own homes and improving health outcomes.
Here’s a closer look at how these factors are coming together to drive growth in the senior care sector.
American seniors overwhelmingly prefer to age in place
According to an AARP survey, 90% of U.S. seniors would prefer to age in place, rather than move in with their children or relocate to a care facility. In the same survey, 80% of adults over 65 said their existing residence is where they will always live.
Baby Boomers are driving growth in the U.S. senior population
Today, roughly half of all Baby Boomers are over the age of 65. Over the next decade, the remaining Baby Boomers will reach retirement age. As a result, the U.S. senior population is projected to grow from 56.1 million to 73.1 million — a 30% increase — from 2020 to 2030. For the first time in history, 1 in every 5 Americans will be over retirement age by the end of the decade.
Need for senior care services rises rapidly as seniors age.
Between the ages of 65 to 75, only 8% of seniors have severe long-term caregiving needs. Over the age of 85, this number rises to more than 40%. Additionally, 25% to 30% of seniors over the age of 85 suffer, or will suffer, from some form of cognitive decline. Because of this relationship, demand for senior care is driven largely by seniors 75+ years old.
Demand for in-home care among Baby Boomers is increasing
In 2021, the first Baby Boomers reached the age of 75 — the age when seniors’ likelihood of required in-home care starts to rapidly increase. This means that peak demand for in-home care among this generation is only starting. Over the next 10 to 20 years, senior care needs are expected to grow dramatically among the Baby Boomer generation, driving further growth in this sector.
Medicare plans increasingly cover home care services
In addition to population trends, Medicare programs are increasing coverage of at-home care. In 2021, the number of Medicare Advantage plans that covered home care services reached 14%. While this number is still lower than it should be, it is more than double the percentage from 2020. What’s more, this number is projected to rise even further within the next few years, expanding the market for in-home care.