Fran Seeley, 81, doesn’t see herself living on the edge of a financial crisis. But it’s uncomfortably close.
Each month, Seeley, a retired teacher, receives $925 from Social Security and a $287 withdrawal from an individual retirement account. To make ends meet, he has taken out a reverse mortgage on his home in Portland, Maine, yielding $400 a month.
Until now, Seeley has been able to live on that income, about $19,300 a year, by carefully monitoring her spending and tapping into limited savings. But if her excellent health worsens or she needs help at home, Seeley doesn’t know how she would pay for those expenses.
More than half of older women living alone—54 percent—are in a similarly precarious financial situation: either poor by federal poverty standards or with incomes too low to pay for essential expenses. For single men, the proportion is lower, but still surprising: 45%.
That’s according to a valuable but little-known measure of the cost of living for older people: the Elderly Index, developed by researchers at the University of Massachusetts-Boston Institute of Gerontology.
A new coalition, the Equity in Aging Collaborative, plans to use the index to influence policies that affect older adults, such as property tax relief and expanded eligibility for programs that help with medical expenses. Twenty-five leading aging organizations are members of the collaboration.
The goal is to fuel a robust dialogue about “the true cost of aging in America,” which is still underappreciated, said Ramsey Alwin, president and CEO of the National Council on Aging, the coalition’s organizer.
“Even more people are struggling”
Nationally, and for every state and county in the United States, the Seniors Index uses several public databases to calculate the cost of health care, housing, food, transportation, and miscellaneous expenses for the elderly. It represents a simple budget, adjusted for whether older adults live alone or as a couple; whether they are in poor, good or excellent health; and if they own or rent homes, with or without a mortgage.
The results of the analyzes are revealing. In 2020, according to data provided by Jan Mutchler, director of the Institute of Gerontology, the index shows that almost 5 million elderly women lived alone, 2 million elderly men lived alone and more than 2 million elderly couples they had incomes that made them financially insecure. .
And those estimates were before inflation soared to more than 9%, a 40-year high, and older adults continued to lose jobs in the second and third years of the pandemic. “With these layered stressors, there are even more people struggling,” Mutchler said.
Nationally and in all states, the minimum cost of living for seniors as calculated by the Seniors Index far exceeds the federal poverty thresholds, which are used to calculate official poverty statistics. (The federal poverty thresholds used by the Senior Index differ slightly from the federal poverty guidelines. State-by-state data can be found here.)
The poverty rate “doesn’t cut it”
A national example: The Seniors Index estimates that a single, healthy, rent-paying older adult needed $27,096, on average, for basic expenses in 2021, $14,100 more than the federal poverty line of $12,996. For couples, the gap between the index’s needs calculation and the poverty line was even wider.
However, eligibility for Medicaid, food stamps, housing assistance and other safety net programs that help older adults is based on federal poverty standards, which do not account for geographic variations in the cost of living or medical expenses incurred by older adults, among others. factors (This is not just a problem for older adults; poverty measures have been widely criticized by age groups.)
“The poverty rate just doesn’t cut it as a realistic view of the struggles that older adults have,” said William Arnone, executive director of the National Social Security Academy, one of the members of the new coalition. “The Elder Index is a reality check.”
In April, University of Massachusetts researchers showed that Social Security benefits cover only a fraction of what older adults need for basic living expenses: 68% for a healthy older person who lives alone and pays rent and 81% for an older couple in the same. situation.
“There’s a myth that Social Security and Medicare miraculously take care of all the needs of older people,” said Alwin of the National Council on Aging. “The reality is they don’t, and a lot of people are a crisis away from economic insecurity.”
Lawyers: Seniors need help
Organizations across the country have been using the Seniors Index to convince policymakers that seniors need more assistance. In New Jersey, where 54 percent of seniors are financially insecure according to the index, advocates used the data to protect property tax relief programs for seniors during the pandemic. In New York, where nearly 60 percent of seniors are financially insecure, advocates convinced the legislature to raise the Medicaid income eligibility threshold.
In San Diego, where up to 40 percent of seniors are financially insecure, Serving Seniors, a nonprofit agency, convinced county officials to use pandemic-related stimulus payments to expand health care programs. nutrition for the elderly. As a result, the agency has been able to double the production of home-cooked meals to more than 1.5 million annually.
Officials are often wary of the financial impact of expanding programs, said Paul Downey, president and CEO of Serving Seniors. But, he said, “we should use a reliable measure of economic security and at least know how well the programs we offer are doing.” By law, California’s Area Agencies on Aging use the Elderly Index in their planning process.
Maine is No. 5 on the list of states ranked by the proportion of seniors living below the seniority index, 56%. For someone in Fran Seeley’s situation—an older adult who is in excellent health, lives alone, owns a home, and doesn’t pay a monthly mortgage—the index suggests $22,560 a year is needed, $3,200 more than Seeley’s annual income and $9,500. above the federal poverty line.
Budget gap
A look at Seeley’s budget reveals how quickly the necessary expenses add up: $2,041 a year for Medicare Part B (this is deducted from his Social Security check), $4,156 for property taxes, and stormwater, $390 for home insurance, $320 for furnace cleaning, $1,440 for heating, $125 for water, $500 for gas and electric, $300 for maintenance property, $1,260 for phone and internet, $150 for car registration, $640 for car insurance, $840 for gas at current prices, $300 for car maintenance, and $4,800 for food.
Total: $17,262. And that doesn’t include the cost of medicine, clothing, toiletries, any entertainment or other incidentals.
Seeley’s greatest luxury is taking care of four cats, which she describes as “the light of my life.” Her annual wellness checks cost about $400 a year, while her food costs about $1,080.
With inflation making your budget even tighter, “it means I have to cut back any way I can. I find myself walking into stores and saying, ‘No, I don’t need it,'” Seeley said. “The worry biggest thing I have is not being able to afford to live in my house or getting sick. I know the medical expenses could wipe me out financially in no time.”
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with Policy Analysis and Surveys, KHN is one of the three main operating programs of KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization that provides information on health issues to the nation.
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