Older Americans are sitting on enormous amounts of housing wealth. At the same time, poverty among them is rising.
About 10 million Americans aged 65 and older lived in poverty in 2025 under the Supplemental Poverty Measure, according to a new AARP Foundation analysis of U.S. Census Bureau data. Their poverty rate reached 15.4%—the highest of any age group.
The findings clash with a familiar story about aging in America: Older generations have accumulated tremendous wealth, much of it in their homes, and are expected to pass trillions of dollars to their heirs over the coming decades.
But those numbers describe very different groups of people, says Joel Berner, senior economist at Realtor.com®.
“There are two things at play here,” Berner says. “First, those aggregated wealth numbers skew heavily toward high net worth seniors. Seniors who don’t own homes are much more likely to face poverty conditions, so both situations can be true for different subsets of the senior population.”
Homeownership itself doesn’t necessarily resolve the contradiction, either.
“Second, even among homeowning seniors, their housing wealth is illiquid,” Berner says. “It can’t pay for groceries or utilities unless the home is sold or borrowed against, so many seniors end up house-rich and cash-poor.”
The housing shortage can trap older homeowners, too
The gap between the government’s two poverty measures helps illustrate Berner’s point.
Under the official poverty measure, 9.8% of adults 65 and older—or about 6.4 million people—were poor in 2025. Under the Supplemental Poverty Measure, which accounts for expenses like out-of-pocket medical costs, the rate was 15.4%, or roughly 10 million people.
“The biggest advantage the SPM offers is insight into out-of-pocket medical expenses, which affect seniors at a high rate even after Medicare benefits are applied,” Berner says. “Seniors dealing with medical issues can easily become cash-strapped, and it’s important to include this in the analysis.”
And poverty figures alone don’t capture the depth of the financial strain.
Over half (53%) of older adults living alone and a quarter (25%) of older couples had incomes below what they needed to cover basic expenses in 2025, according to the University of Massachusetts Boston’s Elder Index—an increase of 5 and 4 percentage points, respectively, since 2022.
Jan Mutchler, director of UMass Boston’s Gerontology Institute, has described the distinction this way: “Our goal with the Elder Index is to move the financial security conversation toward adequacy rather than destitution.”
And housing is a growing part of that conversation.
The income needed to meet basic expenses rose from $36,300 in 2022 to $39,396 in 2025, for a single older homeowner with a mortgage—higher housing costs accounted for roughly two-thirds of that increase.
Even homeowners without a mortgage weren’t insulated. Their housing expenses rose nearly 14% over that period, as the costs of homeownership climbed.
Across homeowners, property taxes rose 31% between 2019 and 2025, while average monthly homeowners insurance premiums jumped 72%, according to Harvard University’s Joint Center for Housing Studies’ 2026 State of the Nation’s Housing report. Median housing costs for owners who held their homes free and clear rose 35% between 2019 and 2024, compared with a 23% increase in homeowner incomes.
Rising costs can put pressure on home equity
“Rising costs are eating into household incomes across the board, and older Americans are feeling that gap acutely,” says Richard Johnson, vice president of financial security at the AARP Public Policy Institute.
And when income isn’t enough to cover those costs, the equity built up in a home can become another place to turn. Research suggests many ultimately do.
Among households that began with at least $100,000 in investable assets, more than 40% ultimately tapped their home equity during retirement, through borrowing against their homes or moving to a less valuable one, according to the Center for Retirement Research at Boston College. Fewer than a third had expected to do so.
Separate research from the center found that long-term-care costs can be one reason why. A 2025 study found that long-term-care spending shocks led retirees to draw down their home equity and reduced how much they expected to leave to their heirs.
Those costs can quickly overwhelm ordinary retirement income. Only 24% of households with someone aged 75 or older had enough income left after basic living expenses to afford one daily visit from a paid home health aide, according to research from Harvard.
But one of the most obvious ways to unlock housing wealth—selling a larger home and moving into something smaller and cheaper—isn’t necessarily easy, either.
“The housing shortage is keeping younger generations out of homeownership, but it affects older generations with exit and liquidity concerns for homeowners and rising rents on fixed incomes for renting seniors,” Berner says.
“Many homeowning seniors could theoretically downsize and liquidate some of their home equity, but the market doesn’t offer many opportunities to do so (in the same way that it doesn’t offer many opportunities to first-time homebuyers) because that starter home inventory is so depleted.
“Instead, they get stuck in larger homes that are more expensive to maintain, creating further cash flow problems,” he says.
And older renters have no equity to unlock in the first place. In 2023, 58% of renter households headed by someone 65 or older were housing-cost-burdened, representing about 4.5 million households, according to Harvard.
That helps put the Great Wealth Transfer into perspective. Cerulli Associates estimates that $124 trillion will transfer through 2048, including $105 trillion to heirs. But more than half of the total is expected to come from high and ultrahigh net worth households, which make up just 2% of households.
For everyone else, the rising cost of aging and housing may mean that some of that wealth has to be used first.
