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