The ‘True Cost of Aging’ index shows that many seniors cannot afford basic necessities

Fran Seeley, 81, doesn’t see herself as living on the edge of a financial crisis. But he is uncomfortably close.

Each month, Seeley, a retired teacher, receives distributions of $925 from Social Security and $287 from a separate retirement account. To make ends meet, he took out a reverse mortgage on his Portland, Maine, home that yields $400 a month.

So far, Seeley has been able to survive on this income — about $19,300 a year — by carefully monitoring her spending and drawing on limited savings. But if her excellent health deteriorates or she needs help at home, Sally doesn’t know how she will pay for these expenses.

More than half of older women living alone — 54% — are in a similarly precarious financial situation: either poor by the federal poverty standard or with too little income to cover 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 relief and increased eligibility for programs that help with medical expenses. Twenty-five prominent aging organizations are associate members.

The goal is to encourage a robust dialogue about “the true cost of aging in America,” said Ramsey Alwin, president and CEO of the National Council on Aging, the coalition’s organizer.

Nationally, and for each state and county in the United States, the Elder Index uses various public databases to calculate the cost of health care, housing, food, transportation and miscellaneous expenses for seniors. This represents a bare-bones budget, adjusted for whether older adults live alone or as part of a couple; whether they have poor, good, or excellent health; And they rent or own homes, with or without a mortgage.

The results from the analysis are eye-opening. In 2020, according to data provided by Jan Müchler, director of the Institute of Gerontology, the index shows that about 5 million elderly women live alone, 2 million elderly men live alone, and more than 2 million elderly couples had incomes that made them economically insecure.

And those estimates were before inflation rose above 9% — a 40-year high — and older adults continued to lose jobs in the second and third years of the pandemic. “With these pressures layering up, 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 exceeds the federal poverty threshold, which is used to calculate official poverty statistics. (The federal poverty threshold used by the Elder Index differs slightly from the federal poverty guidelines. Data for each state can be found here.)

A national example: The Elder Index estimates that an older adult in good health will need an average of $27,096 in basic expenses in 2021 — $14,100 more than the federal poverty threshold of $12,996. For couples, the gap between the needs index calculation 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 variations in other adults’ living costs or medical expenses. (This is not a problem for older adults alone; poverty measures have been widely criticized across age groups.)

“Poverty rates don’t cut it as a realistic view of the struggles of older adults,” said William Arnone, chief executive officer of the National Academy of Social Insurance, one of the members of the new coalition. “A reality check on the aging index.”

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 an elderly person in good health who lives alone and rents, and 81% for an elderly couple. status.

“There’s a myth that Social Security and Medicare will miraculously meet all of people’s needs in old age,” says Alwin of the National Council on Aging. “The reality is they don’t, and too many people are one crisis away from economic insecurity.”

Organizations across the country are using the Elderly Index to convince policymakers that older adults need more support. In New Jersey, where 54% of seniors are economically insecure, according to the index, advocates used the data to defend property-tax relief programs for older adults during the pandemic. In New York, where nearly 60% of seniors are economically insecure, advocates persuaded the Legislature to raise the Medicaid income eligibility threshold.

In San Diego, where nearly 40% of seniors are economically insecure, Serving Seniors, a nonprofit organization, has urged county officials to expand the senior nutrition program in response to pandemic-related stimulus payments. As a result, the agency has been able to double production to more than 1.5 million home delivery meals annually.

Officials are often wary of the financial impact of program expansion, 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’re offering are doing.” By law, Area Aging in California uses the Elder Index in their planning process.

Maine is No. 5 on the state list for the share of seniors living below the Elder Index, at 56%. For Fran Seeley’s situation (an older adult who is in excellent health, lives alone, owns a home and does not pay a monthly mortgage), the index suggests a need of $22,560 a year—$3,200 more than Seeley’s annual income and $9,500 above the federal poverty threshold.

Fran Seeley’s income — from Social Security, a retirement account and a reverse mortgage — comes to about $19,300 a year. With inflation rising, “that means I have to cut back any way I can,” Seeley says. (Susan Lavigne)

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 his Social Security check), $4,156 for property and stormwater 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 maintenance and $4,800 for food. .

Total: $17,262. And it does not include medicine, clothing, toiletries, any form of entertainment or other incidental expenses.

Seeley’s greatest luxury is caring for four cats, which she describes as “the light of my life.” Their annual wellness check-ups cost about $400 a year, while their meals cost about $1,080.

Inflation is now making his budget tighter, “It means I have to cut back any way I can. I go to the store and say to myself, ‘No, I don’t need this,'” Seeley said. “My biggest worry is not being able to live in my house or getting sick. I know that medical expenses can wipe me out financially in no time.”

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