from bad to worse – the potential for 2009
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Ed i to r ia l
From bad to worse – the potential for 2009
Whenever one opens a newspaper, turns on the
radio or television or surfs the Internet, the news of
the financial situation of individuals and countries
worldwide appears to be continuing to deteriorate.
Unfortunately, in these circumstances there is a
tendency to look for somebody to blame, be it
politicians, bankers or the price of oil. It would also
appear that as a result of the global nature of the
crisis, there is a significant likelihood that the
recession will last a significant amount of time and
for some countries may turn into a depression.
History relates how disastrous this was in the
1930s, the mistakes that were made then and the
legacy that lasted for a generation. Few, if any, still
alive, will have been part of that, but may be aware
of the significant hardship that had to be endured
by their relatives.
As with all these crises, certain groups are always
affected and the older adult is one of the most
significant. Over many years this group has been
encouraged to save for their old age and to place
their savings in funds that would gain interest and
grow in size. Many of them now use the interest
they earn to improve their state pension, but with
the central banks reducing their interest rates to
virtually zero, the impact on these savings has been
catastrophic, particularly as this elderly group of
savers is said to number over 12 million. Although
the reduction in interest rates has been of help to
those paying a mortgage to buy a house, they only
constitute around 20% of the population with the
other 80% being potential savers. Somehow one
feels that the chorus of anguish from borrowers is
silencing the pain of the majority.
We are all also aware of the effect of the credit
crunch on the value of people’s property, this being
particularly profound in the UK and USA. In the
UK, many older adults have used the value of their
homes to release some cash to pay for the fees of
their residential or nursing home. Now with the
sliding value of their houses, which in many cases
runs into tens of thousands of pounds, they are
having to deal with significant shortfalls and are
unable to pay many of their bills. Even if they wish
to sell their homes, nobody wants to buy them,
either because they cannot borrow the money,
they are concerned about losing their job, do not
want to make a new commitment or are hoping
that the price might fall even further. Many chil-
dren are often more than willing to help out but
according to Help the Aged, fees can start at around
£460 a week for residential care and over £660 for
nursing homes and these sums are beyond the
means of many caring families. Similar issues are
found in America as many older people cannot sell
their own homes and are therefore unable to move
into retirement homes as they cannot meet the
$100 000 to $500 000 down payment. In addition,
the average annual cost of living in a nursing home
is over $67 000 (MetLife Market Survey of Nursing
Home and Home Care Costs, 2006). It also is esti-
mated that there are 4.27 million houses in the
USA that are on the market to be sold but it is
difficult to find out how many of these are owned
by people over 65 years (The New York Times, 21
November 2008). These issues are having a detri-
mental effect in the other direction as retirement
and residential care homes are finding that their
occupancy rates are falling rapidly and vacancies
are up to 20% or even 30% in the state of Florida.
In an effort to reduce the problem, the Depart-
ment of Housing and Urban Development in the
USA administers housing for the elderly by subsi-
dising it through local housing authorities. This
type of support is normally available to adults over
the age of 62 having an income which is below
80% of the median for the place where they live. In
addition, care is taken to ensure that the rent they
pay is no more than 30% of their income. This
process appears to provide a solution for some of
the problems facing the elderly in these difficult
times.
Recently, there was the Annual Conference of
the European Association of Homes and Services
for the Aging (EAHSA, Brussels, 2008) where,
amongst other matters, they considered the effect
of the credit crunch on the older adult. They re-
ported that in France, Italy, the Netherlands, Ger-
many and Belgium, the provision of care homes for
the elderly had not been so adversely affected by
the credit crunch as it had in the UK, but that new
projects were being hampered by the difficulty in
borrowing money. It was also reported that in
Europe, there was little differential with regard to
costs for care in the private or public sector. Con-
sideration was given to the potential new models of
care housing as the market for housing for the el-
derly was considered as one having important
growth potential. This was particularly relevant in
Germany where only 1% of all homes were suit-
able for older people. An interesting statistic that
arose from another presentation was the fact that
� 2009 The Author
Journal compilation � 2009 The Gerodontology Association and Blackwell Munksgaard Ltd, Gerodontology 2009; 26: 1–2 1
64% of all public transport accidents involved
people over the age of 65 years.
With the recent election of Barack Obama to the
Presidency of the United States, there seems to be
the strong feeling that things are going to change.
One wonders how one man can produce such an
effect not only in his own country but in many
countries throughout the world. I am sure we all
wish him success.
Money is not the only answer, but it makes a differ-
ence.
Barack Obama
James P. Newton
Editor
� 2009 The Author
2 Journal compilation � 2009 The Gerodontology Association and Blackwell Munksgaard Ltd, Gerodontology 2009; 26: 1–2
2 Editorial
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