Work hard throughout your life, pay off the mortgage, rest easy in retirement.
That’s the future every homebuyer envisions. In reality, 40% of elder homeowners remain “economically insecure” even after the mortgage is paid.
That finding, from New Jersey Division of Aging Services’ Living Below the Line report, makes clear that our state’s high housing costs keep many seniors in a constant state of financial uncertainty. For homeowners, the primary sources of those insecurities are the state’s property taxes, which year after year rank as the most expensive in the nation.
In my home county of Bergen, the average annual property tax in 2017 was $11,564, or about 57% of the average annual Social Security earnings, which a third of retirees in New Jersey subsist solely on.
Even homeowners who retire with other resources — a pension, investments, a savings account — routinely end up “house-poor,” unable to afford the taxes on a home that may be worth a lot, but not enough for them to cash out and live affordably somewhere else.
Helping to reduce property taxes
Since 1997, senior citizens and homeowners with disabilities have had some relief — the Property Tax Reimbursement Program, more commonly known as the Senior Freeze.
That program, combined with the 40-year-old Homestead Benefit Program, can reduce the property-tax bill by thousands of dollars a year for eligible New Jerseyans.
Funding for both the Homestead Benefit and the Senior Freeze was cut out of the three-month stopgap state budget enacted in June, and advocates fear that funding won’t be restored in the budget the state must adopt by Oct. 1.
Already, many older residents are in a pinch, because they rely on the Senior Freeze check that typically arrives in mid-July to pay property-tax installments due Aug. 1.
The coronavirus pandemic has left state officials with some tough budgeting decisions, but doing away with programs that help low- and middle-income older adult and disabled homeowners age in place is the wrong choice to make.
These programs were created out of the awareness that rising property taxes could drive older New Jerseyans out of their longtime homes as well as their communities. New Jersey should strive to keep our communities multigenerational by continuing to fund these valuable property-tax relief programs.
A heavy weight for seniors
As a geriatric social worker, I assist more than 100 older residents in northwest Bergen County in completing their applications for property-tax relief. One of them is Fran, a 95-year-old widow from Waldwick, whose property-tax bill is more than $9,000 a year.
Before the programs were frozen in March, she expected to receive about $4,000 in property-tax relief but will now have to dip into her dwindling savings to pay that difference. Fran is in good health, so much so that she thinks she could live past 100. But rather than being comforted by the prospect of longevity, she is worried her money will run out — perhaps sooner now that she won’t receive her Homestead credit or Senior Freeze payment this year.
“And then what happens?” she asks.
Finding a more affordable place to live in Waldwick or in the surrounding towns would be hard, if not impossible. Market-rate condos and apartments typically cost far more than the monthly expenses of a paid-off home. For the few affordable senior housing buildings that are out there, the wait lists can stretch three to five years.
Some older residents feel forced by high property taxes to move out of the region or state to unfamiliar places where they’re separated from friends, family and other support systems. Many who stay end up skimping on health insurance, food, medications, or important home services to pay their property taxes, putting their mental and physical health at risk.
If older adults neglect their health, they hasten the day when they start to need the kind of medical and long-term care that costs the state and federal governments tens of thousands of dollars each year. About two-thirds of New Jersey’s nursing home residents are on Medicaid, where their housing and care is reimbursed at a rate of $222 a day, on average, or as much as $81,000 a year.
Smart state budgeting
By comparison, providing $4,000 a year in property-tax relief to help a healthy 95-year-old keep living independently in her own home is smart state budgeting.
As co-chair of Age Friendly Ridgewood, I work with leaders of 16 other Age Friendly communities in northern New Jersey, all of which have surveyed older adults about their needs. When we ask homeowners their biggest challenges to remaining in their homes, the conversation usually turns to property taxes.
We have long worked to make sure older homeowners are aware of these two programs and how to apply. Now we are working to make sure those who qualify but have yet to apply for the Senior Freeze this year do so before Nov. 2 to retain their eligibility and maintain the amount of taxes paid in their first year of application (base tax year). If and when the program is reinstated, the reimbursement from the state is calculated by the difference between the base tax year and the application year.
To be sure, there isn’t an easy fix to the budget woes our state and local governments are suffering right now, just as there isn’t a solution at the ready to lower the Garden State’s property taxes.
Our property-tax rates are reflections of our state’s value system. Our citizens and elected leaders value home rule over regional consolidation. We want high-quality independently run school districts, separate police and fire departments, and we over-rely on the property tax to pay for all these locally administered services.
But we also need to value the economic well-being of seniors, people with disabilities and other vulnerable homeowners — and to recognize that not doing so may only cost our other government-funded systems more in the long run.
The Senior Freeze and Homestead Benefit play a crucial role in preventing New Jersey homeowners from aging into poverty, and helping them age in place, which is a more desirable outcome — for them, for our communities and for the government.
These two programs ought to be viewed as untouchable — as valued and needed as the federal benefits of Social Security and Medicare.
Especially now, in this time of pandemic and economic upheaval, New Jersey’s older homeowners deserve to rest a little easier.