Three challenges impacting finance in senior living—and how to handle them
Senior living finance leaders face rising demand, workforce shortages, and shifting demographics. Learn how the right strategies and tools can drive growth and resilience.
Senior living facilities have never seen more demand. So why is it proving so hard to grow?
With rising demand, technological advancements, and an aging population putting unprecedented pressure on operators, senior living finance leaders are being asked to step up and provide more than just reports. Their ability to consider financial sustainability in senior living alongside operational challenges makes them uniquely placed to provide guidance on workforce shortages in assisted living, the evolving needs of an aging demographic, and strategies to build capacity for growth.
With the right digital tools and visibility, senior living finance leaders can streamline operations, spot opportunities to enhance an organization’s financial sustainability, and build resilience for the future.
1. Escalating workforce challenges in senior living
Ongoing labor shortages in assisted living and senior housing are making it difficult for organizations to provide high-quality care or to plan for growth. These shortages not only strain day-to-day operations but also limit the ability of organizations to scale and innovate, putting long-term sustainability at risk. One survey found 84% of senior living leaders cite the workforce as a primary concern for the past three years, and 87% say it’s impacting their ability to deliver high-quality experiences.
Those numbers are only expected to rise with the US administration’s plans to change immigration laws. Immigrants make up almost a third (28%) of the workforce providing care (versus 19% in other sectors). Changes to programs affecting those in Cuba, Haiti, Nicaragua and Venezuela are already having an impact. Some workers have stopped going to work out of fear that they or their families will be detained by immigration officials.
The risk is that the reduction in staff could mean senior living providers aren’t able to provide the quality of service they want to (with reputational damage repercussions), or to expand capacity. Some have had to increase wages to compete for staff, even though labor-related costs already account for around 55% of total operating expenses. Data from the National Investment Center for Seniors Housing and Care shows wages increased by 7.4% on average in 2024. This sharp rise in labor costs directly impacts margins and forces operators to rethink their staffing strategies. Others have introduced daily pay options to boost staff retention, and are hoping the proposed rollback of the minimum staffing mandate for skilled nursing facilities will help ease the pressure.
Finance leaders are now at the forefront of workforce strategy, collaborating closely with HR to address staffing shortages and retention. According to the 2025 Sage Growth Code survey, 70% of healthcare CFOs are working with HR at least weekly, and 94% expect even greater collaboration ahead. With better visibility into operational costs and smart investment in automation, finance leaders can identify where wage increases are feasible—helping boost staff morale and make roles within senior living organizations more attractive to the next generation.
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2. The evolving needs of America’s aging population
The baby boomer generation—approximately 73 million strong in the US—is now aging into senior living. By 2030, one in five people in the US will be a senior citizen. They’re also living longer with more complex needs in later life, which are more expensive to provide. These trends require finance leaders to develop more sophisticated forecasting models and allocate resources for specialized care, ensuring both quality and sustainability.
Senior living communities need facilities to cope with conditions such as chronic heart disease, dementia, arthritis, and other illnesses, many of which require constant monitoring and specialized medical attention. Recent data shows there’s been a 22% increase in bed prices to reflect the enhanced level of care that’s being provided. That’s expected to continue: one study estimates that the number of new dementia cases will double over the next 40 years as the population ages.
Even with price increases, profitability is still being squeezed. More operators are looking to the active adult segment of senior living, who typically need less care. For this group, 55+ communities are seen as more of a lifestyle choice, offering higher-end amenities, convenience, and the latest technologies. They want independence but take comfort in the knowledge that care will be available when needed.
This business model offers greater profitability for senior living operators, but it also demands significant upfront investment. To remain competitive, organizations are exploring opportunities to diversify into hybrid models of care, such as in-home support and short-term rehabilitation services. Finance leaders play a critical role in this evolution. By accurately forecasting costs, evaluating the feasibility of more flexible business models, and managing the complexity of multiple funding streams, they empower senior living providers to adapt, compete, and grow as consumer preferences change.
3. Building bed capacity to support senior living growth
The aging population means demand for senior living beds is growing fast. Roughly 2.1 million Americans already live in senior housing, including independent living, assisted living, and memory care communities, with facility occupancy rates around 84.4%. It’s estimated the sector will need approximately 806,000 additional senior housing units by 2030, but at current development rates, only about 40% of that additional capacity is expected to be fulfilled.
Ownership transitions, including rising private equity involvement, are also fueling demand for expansion. However, senior living operators face significant barriers, such as tariffs, inflation, and supply chain disruptions, that are driving up the cost of building, renovating, and maintaining facilities. As a result, many providers are forced to make difficult decisions about how and when to pursue growth.
One way to expand capacity without adding more beds is through new service lines, such as home and community-based care. One survey of 200 nonprofit life plan communities found over 60% said they offer home-based services, and another third of the respondents plan to introduce them in the next few years. Alternatively, some providers are converting distressed communities or vacant commercial properties into senior housing facilities, which can be a more cost-effective solution than building new facilities. By leveraging technology to assess costs, risks, and potential returns, finance leaders enable senior living providers to make informed decisions about expansion and service diversification.
Finance leaders driving the future of senior living
Senior living organizations face unique challenges, from cost containment and diversification of business models to workforce shortages and real estate considerations. Their ability to survive and thrive in the future will be driven by financial resilience and adaptability as needs change.
Technology alone will not solve these challenges. But with the right tools on hand, finance leaders will be empowered with the data and insights to facilitate better decision-making for the next era of senior living. Leveraging advanced financial solutions, such as Sage Ai-powered tools, equips leaders with the insights needed to navigate complexity and drive meaningful change.
Discover more about how high-performance finance leaders are preparing their senior living organizations for the future with: Profitability under pressure: High-performance finance for senior living.
