Fran Seeley, 81, doesn’t see herself living on the edge of a financial crisis. But she is uncomfortably close.
Each month, Seeley, a retired teacher, receives $925 in distributions from Social Security and $287 from an individual retirement account. To make ends meet, she took out a reverse mortgage on her Portland, Maine, home that earns her $400 a month.
Until now, Seeley has been able to live on this income — about $19,300 a year — by carefully monitoring her expenses and drawing on limited savings. But if her good health deteriorates or she needs help at home, Seely doesn’t know how she’ll pay those expenses.
More than half of older women living alone—54%—are in a similarly precarious financial situation: either poor by federal poverty standards or with insufficient income to pay for essential expenses. For single men, the share is lower but still surprising – 45%.
That’s according to a valuable but little-known measure of the cost of living for older adults: the Elder Index, developed by researchers at the Gerontology Institute at the University of Massachusetts-Boston.
A new coalition, the Equity in Aging Collaborative, plans to use the index to influence policies that affect older adults, such as property tax credits and expanded eligibility for programs to help with medical expenses. Twenty-five prominent aging organizations are associate members.
The goal is to encourage a stronger dialogue about “the real costs of aging in America,” said Ramsey Alvin, president and chief executive of the National Council on Aging, one of the coalition’s organizers.
“A lot of people are still struggling”
Nationally, and for each state and county in the United States, the Elder Index uses various public databases to calculate the value of health care, housing, food, transportation, and miscellaneous expenses for seniors. It represents a bare-bones budget, adjusted for older adults living alone or as part of a couple. whether they are in poor, good, or excellent health; And they rent or own homes, with or without mortgage.
The results of the analysis are eye-opening. In 2020, according to data provided by Jan Mutchler, director of the Gerontology Institute, the index shows that about 5 million older women living alone, 2 million older men living alone and more than 2 million older couples had incomes that made them financially insecure. .
And those estimates had inflation rising to more than 9% — a 40-year high — and older adults continuing to lose jobs in the second and third years of the pandemic. “By layering those stresses, more people are struggling,” Mutchler said.
Nationally and in every state, the minimum cost of living for older adults as calculated by the Elder Index is much higher than the federal poverty thresholds, which are used to calculate official poverty statistics. (The federal poverty thresholds used by the Elder Index differ slightly from the federal poverty guidelines. Data for each state can be found here.)
Poverty rate “isn’t going to cut it”
A national example: The Elder Index estimates that a single rent-paying older adult in good health will need an average of $27,096 for basic expenses in 2021—$14,100 more than the federal poverty threshold of $12,996. For couples, the gap between the calculation of the index of needs and the poverty threshold was even greater.
Yet 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 differences in living or medical expenses incurred by older adults. Factors. (This is not an issue for older adults alone; poverty measures have been widely criticized across age groups.)
“The poverty rate does not reduce the struggles older adults face as a realistic approach,” said William Arnone, chief executive officer of the National Academy of Social Insurance, one of the new coalition’s members. “The Elder Index is a reality check.”
In April, researchers at the University of Massachusetts showed that Social Security benefits cover only a fraction of what older adults need for basic living expenses: 68% for a senior in good health who lives alone and pays rent and 81% for an elderly couple. status.
“There’s a myth that Social Security and Medicare will miraculously take care of all the needs of people as they age,” said Alvin of the National Council on Aging. “The reality is that they are not, and many people are one crisis away from economic insecurity.”
Advocates: Seniors need support
Organizations across the country have been using the Elder Index to convince policymakers that older adults need more support. In New Jersey, where 54% of seniors are financially insecure according to the index, advocates used the data to protect property tax relief programs for older adults during the pandemic. In New York, where nearly 60% of seniors are financially insecure, advocates persuaded the legislature to raise the Medicaid income eligibility threshold.
In San Diego, where 40% of seniors are financially insecure, Seniors Serving, a nonprofit agency, persuaded county officials to use pandemic-related stimulus payments to expand senior nutrition programs. As a result, the agency has been able to double its production of home-delivered meals, to more than 1.5 million annually.
Officials are often wary of the financial impact of expanded programs, said Paul Downey, president and CEO of Serving Seniors. But, he said, “we have to use a reliable measure of financial security and at least know how well the programs we offer are doing.” By law, California area agencies use the Elder Index in their planning process.
Maine is No. 5 on the list of states ranked by the Elder Index, the share of seniors living below 56%. For an older adult in Fran Seeley’s situation (in excellent health, living alone, owning a home and not paying a monthly mortgage), the index calls for $22,560 a year—$3,200 and $9,500 more than Seeley’s annual income. above the federal poverty line.
A look at Seeley’s budget shows how quickly necessary expenses add up: $2,041 a year for Medicare Part B (it’s deducted from her Social Security check), $4,156 for property and storm water taxes, $390 for home insurance, $320 for furnace cleaning, $1,440 for heat, $125 for water, $500 for gas and electricity, $300 for property maintenance, $1,260 for phone and internet, $150 for car registration, $640 for car insurance, $840 for gas at current prices, $300 for car repairs, and $4,800 for food.
Total: $17,262. And it does not include medicine, clothing, toiletries, entertainment of any kind, or other incidental costs.
Seeley’s ultimate luxury is caring for her four cats, whom she describes as “the light of my life.” Their annual health check-up costs about $400 a year, while their food costs about $1,080.
Now that inflation has made her budget even tighter, “It means I have to cut back as much as possible. I find myself going to stores and saying, ‘No, I don’t need that,'” Seeley said. “The biggest worry I have is not being able to stay at home or being sick. I know that medical expenses can wipe me out financially at any time.”
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Along with policy analysis and polling, KHN is one of the three major operating programs at the KFF (Kaiser Family Foundation). KFF is a thriving non-profit organization providing information on health issues to the nation.