Californians anticipating an empty nest in their golden years are now faced with a rocky reality: The Great Recession and its jobless recovery have forced many adult children home, increasing household expenses by 50 percent or more for many families, according to a new study by the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.
The study includes a county-by-county breakdown of the costs of supporting an extended family in California.
For a variety of reasons — lack of a job, job loss, divorce, home foreclosure — more than 2.3 million adult children in California were living with their parents in 2011, 63 percent more than in pre-recession 2006. There were 433,000 older adults, age 65 and over, who housed approximately 589,000 of those adult children.
"A college degree is no guarantee of a job today, and an unprecedented number of families have been forced to return to a multi-generational household," said Steven P. Wallace, associate director at the UCLA Center for Health Policy Research and a co-author of the study. "Until the economy provides the kinds of jobs that allow all adults to be self-sufficient, families will need help."
Low-income parents, who account for almost one-quarter of the total number of older parents supporting an adult child, are particularly affected. Despite having incomes that make it difficult to survive at a basic level in high-cost California, many do not qualify for state and federal assistance.
This is because their incomes are higher — often just slightly — than the national measure of minimum income, the federal poverty level, or FPL. The FPL is used as a benchmark for eligibility for state and federal support and services that could help older adults bear the costs of their expanded households.
"It is absolutely impossible for a low-income family to survive in high-cost California at the income level set by the FPL," said Henry A.J. Ramos, president of the Insight Center. "Poverty is not a one-size-fits-all predicament but very much dependent on where we live. Our policy response should recognize and adjust to this geographic reality."
For example, according to federal poverty guidelines, an older couple who rented could get by on $14,710 a year for all expenses in California in 2011. In contrast, the fair market rent alone for a one-bedroom apartment in San Francisco was $17,580 — more than the entire FPL amount expected to cover all expenses for a low-income couple.
If a senior couple's basic living costs were calculated taking into account the true cost of housing, food, medical care and transportation for low-income older adults, the statewide income needs of a couple who rents would be much higher: $32,696.
Add an adult child to that household, and expenses go up even more, to nearly $48,000 — 259 percent higher than the $18,530 of the FPL for an extended household of three persons.
Among the study's recommendations:
- Raise the maximum assets that older adults can have and still qualify for cash assistance from SSI from its current level of $2,000 ($3,000 for an eligible couple) to $10,000 ($15,000 for a couple) so emergency needs — such as having an adult child return home — can be accommodated.
- Increase the supply of senior and affordable housing.
- Encourage low-income adult children to enroll in Medi-Cal through Covered California to cover their health care costs.
- Increase food assistance to seniors in needy and low-income families by upping the SSI supplement to reflect the increase in the cost of food and by restoring funding to senior meal programs.
Expenses in the study were calculated using the Elder Index, a measure of poverty based on the actual cost of living in each county in California. The index is a more accurate measure of poverty than the national FPL, which uses an outdated formula to calculate costs and has a uniform income level for poverty nationally, whether one lives in rural Alabama or high-cost San Francisco.
Even within California, where an individual lives affects costs: In Kern County, a single, older adult renter with an adult child living at home will spend $30,388 a year. That same renter in San Mateo will spend $44,375. Both numbers are significantly more than the FPL.
Data on the costs borne by low-income older adults are part of a larger release of 2011 Elder Index data on the true basic costs of living for older Californians. See all Elder Index 2011 data here.
Updated every two years by the UCLA Center for Policy Research, in partnership with the Insight Center for Community Economic Development, the Elder Index quantifies the cost of basic necessities like food, clothing and shelter for each county of California and is part of a national movement to improve the way poverty is measured in the U.S.
The methodology for the basic Elder Index was developed by the Gerontology Center at the University of Massachusetts–Boston and Wider Opportunities for Women in Washington, D.C. Some of the data used to calculate needs for adult children is provided courtesy of the Self-Sufficiency Standard project at the University of Washington's Center for Women's Welfare.
Learn more about how the Elder Index is calculated here.
Read the policy brief: "Older Adults Challenged Financially When Adult Children Move Home."
The Insight Center for Community Economic Development is a 45-year-old national research, legal and consulting organization dedicated to building economic health in vulnerable communities.