Advertising Disclosure

Retirement homes in crisis: A perfect storm of costs, labor, and demographics

The industry never recovered from the pandemic

Updated:

Avatar photo
By:
Avatar photo

Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Photo by Yucel Moran on Unsplash

Key Insights

  • A growing number of retirement homes are shutting down across the U.S., alarming families and aging residents alike.
  • Rising costs, labor shortages, and declining occupancy are among the key factors driving closures.
  • Experts warn the crisis could worsen as Baby Boomers age into retirement, overwhelming an already strained system.

Across the United States, retirement homes are closing at an accelerating pace, leaving thousands of elderly residents scrambling for care and highlighting deep structural issues in the long-term care industry. What was once considered a stable business model—housing the aging population—has become increasingly untenable in today’s economic and labor landscape, expats say.

Over the past three years, hundreds of assisted living and skilled nursing facilities have shut their doors permanently. According to data from the National Investment Center for Seniors Housing & Care (NIC), occupancy levels in senior living facilities have not recovered to pre-pandemic levels, hovering around 82% as of mid-2025.

Labor shortages: The tipping point

Perhaps the most acute challenge is staffing. Low wages, burnout, and pandemic trauma have pushed many healthcare workers out of the industry. 

The U.S. Bureau of Labor Statistics reports that nearly 20% of the long-term care workforce left between 2020 and 2024. While other sectors have recovered, nursing and senior care facilities are still playing catch-up.

The cost of maintaining retirement homes has also surged. Inflation has driven up prices for food, medication, utilities, and insurance, while government reimbursements through Medicare and Medicaid have largely failed to keep pace. 

Private-pay facilities face a different problem: Many seniors can no longer afford the rising monthly rates, which now average $4,500–$7,000 for assisted living and even more for skilled nursing.

The demographic collision ahead

Ironically, the industry is collapsing just as the need for elder care is beginning to spike. By 2030, all Baby Boomers will be over 65, and the number of Americans aged 85 and older is expected to double by 2040. Without a significant policy response or reinvention of the care model, experts warn the nation could be headed for a catastrophic shortfall in eldercare capacity.