7/25/2012 2:28 PM ET|
Poverty rising among US retirees
Failing health is especially likely to push older retirees over the edge, researchers say, and problem is expected to worsen.
Growing numbers of older Americans are spending their retirement years in poverty, according to a recent Employee Benefit Research Institute study (.pdf file). The proportion of older people living below the poverty line has been growing steadily since 2005, and many of those people are falling into poverty as they age and spend down their savings.
Poverty rates for people ages 65 to 74 climbed from 7.9% in 2005 to 9.4% in 2009, according to the EBRI analysis of University of Michigan health and retirement study data. For older retirees ages 75 to 84, there was an even steeper increase, from 7.6% to 10.7% over the same time period. But it's the oldest retirees who are the most likely to live in poverty: 14.6% did so in 2009.
Many older Americans are falling into poverty as they age. In 2009, the most recent year included in the study, 6% of those age 85 older were new entrants in poverty, up from 4.6% in 2005. And while 3.3% of people ages 75 to 84 fell newly into poverty in 2005, that number increased to 5.6% by 2009.
One of the biggest drivers of poverty in old age are failing health and the associated medical costs. Most retirees living below the poverty line (70%) have suffered acute health conditions such as cancer, lung disease, heart problems or stroke, compared with 48% for those above the poverty line, according to health and retirement study data. And almost all senior citizens living in poverty (96%) have some sort of health condition, such as high blood pressure, diabetes, psychological problems or arthritis, versus 61.7% of retirees with incomes above the poverty line.
"Medical expenditures go up for the elderly as they age, and medical expenses have been rising over the past decade very rapidly," says Sudipto Banerjee, a research associate at EBRI and the author of the report. "A lot of people have to move to nursing homes, and nursing homes are very expensive. People who live there, they lose their income and assets very quickly."
Many people also spend down their retirement savings too quickly, especially during recessions. "As people age, personal savings and pension account balances are depleted," says Banerjee. "Also, the rising poverty rates noted correspond to the two economic recessions that occurred during the last decade. I would expect that as the economy does better, the rates will go down."
Once you have spent your nest egg, your only remaining source of income is likely to be Social Security. Social Security payments are based on your earnings during your 35 highest-earning years in the workforce. Those who didn't work for 35 years get smaller payments because zeros are included in the average.
Poverty rates for women were nearly double those for men in almost all years between 2001 and 2009. In 2009, poverty rates were 7% for men and 13% for women. And both men and women who are single have significantly higher poverty rates than married couples. When one spouse dies, the total Social Security benefit received by the household often decreases.
The Census Bureau reports that 9% of people age 65 and older lived below the poverty threshold in 2010. But there is an incredible amount of geographic diversity in poverty rates, ranging from more than 25% in Opelousas-Eunice, La., and Gallup, N.M., to less than 2% in Pocatello, Idaho; Helena, Mont., and Ames, Iowa.
A recent Urban Institute study (.pdf file) predicts that poverty rates for people at age 67 are likely to decline in the future. The analysis projects that 7% of Depression-era babies will live in poverty at age 67, compared with 6.1% of late baby boomers and 5.7% of Generation Xers. However, retirement poverty is expected to increase for people without advanced education. For example, the study predicts that retirement poverty rates for high-school dropouts could increase from 13.5% among Depression-era babies to 24.9% for the oldest baby boomers.
Older retirees may have few opportunities to pull themselves out of poverty once they have crossed that threshold. The elderly may not have many opportunities for employment, and they could be further limited by health issues.
The Urban Institute expects retirement-income inequality to increase dramatically over time. The study found that among Depression-era babies, the median income in the top income quintile will be 7.5 times higher than in the bottom income quintile. For Generation Xers, the retirement income gap will increase to a factor of 10.4.
"More income for boomers and Generation Xers is from retirement accounts and less from defined-benefit pensions, and a larger share of income will be from earnings," says Barbara Butrica, senior research associate at the Urban Institute and co-author of the report. "If we look at their (retirement income) replacement rates, Generation Xers and boomers are projected to be significantly worse off on a relative basis."
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Talk to me when you're 85 and we'll see if you still say that.
Dear Ms. Decker,
The Windfall was created for CEO's that received Golden Parachute packages upon retirement, per my understanding, the CEO's who make millions of dollars...that take the golden egg from the giant upon their departure from the castle, so they can't get Social Security. Who we bailed out, in many cases.
In return ...it ended up appling to those who get little pensions...God forbid if someone should get a thousand bucks, or so more a month, on top of their tweleve houndred dollar a monthly annuity.
Anyway, again per my understanding, when Social Security started to become troubled for the umpteenth time or so, the government started to borrow from that trust fund faster than they could pay it back, they figured, what was good for the rich ole boys was good for everybody, hence the Windfall rules applied to the middle and lower classes.
This stopped people with little pensions from collecting on Social Security...and stopped the middle and lower classes from what is known as 'double dipping'. The good ole rich boys couldn't double dip, so being rich they didn't care, yet, they're whiners and wanted it to apply to everyone and Congress had to solve the Social Security Crisis... again.
So, per my understanding, being someone who is not so smart about these things, if your annuity is more or the same amount, as what you would get after paying into Social Security through the payroll taxes, you don't get your Social Security ...cause they have a formula to prorate it or not let you get it at all. There are other complicated rules that are used by the SSA for the purpose of reducing having to pay out to those who paid in, or the spouses that paid into Social Security.
Remember, the corporate rich boys don't need it, but they don't want anyone else to have it either, and I'm not sure if the government has paid back all the IOU's to the Social Security Trust Fund...It's just a guess ...I don't think they have...so they wanted to limit the middle and lower classes from getting it too, because your pension or annuity will allow you to keep up with your bills.
Anyway, long story short, what's good for the rich old Corporate gander is good for the poor old goose. Maybe they just all want us to live on the street.
It's amazing what prescriptions cost. I had no idea. ..and there is no help for single folks that rent until you have lose every single bit of your savings (if you own a home, it isn't figured in if you are eligible for help.. Social security can't cover rent and such, so when your savings are gone, you are homeless. So you hit the donut hole and do without half your insulin and hope you don't lose your toes or eyes or kidney or have another heart attack. It's a constant losing battle
If God has anything worse than being old and sick in America, he's saving it for Hell.
Another Socialist agenda propaganda, taking care of the elderly. Grandma and Grandpa will just have to go out and get a job and work it until they drop dead. They are in the lowest income brackets and don't pay taxes so are therefore sub-human and not deserving of any respect.
The job creators are too busy creating jobs, such trivial things as retirement and benefits will only kill the job creation process. You can not put more burdens on the job creators at such a fragile time in financial history. You Libtards. They can only do so much with only 99% of the wealth and can't be stretched any farther without having the whole 100%.
Any and all Socialist minimum wage laws should be retracted. It only acts as a crutch to those who don't work hard enough. It only enables those who think they are too good to only work 2 jobs to sit on their lazy Liberal **** and complain.
Its nice to see that the serf training is coming along nicely. $25/hour jobs being replaced with $13/hour jobs that look attractive when all the $25/hour jobs disappear. Then the $13/hour jobs can be replaced with $6/hour jobs when all the $13/hour jobs disappear. A few more generations and you will be nice trained, supressed, and spied on slaves.
Then the job creators will really get to work job creating and trickling down.
Used to be a good company you worked for would pay a pension. Now all the thieving CEOs take the pension money and run. Please do name 10 companies that pay a pension today. Right.
The GOP would have us all believe that the retired elderly are the sole perpetrators of our economic woes, asking for their SS and Medicare handouts. You'll notice how the GOP avoids the fact that taxes, aka revenue, are at a 60-year low in this country. Ergo, the GOP and Grover have pledged that more taxes, aka revenue, would be the death of us. Go figure.
Adding to this misguided GOP ideal is the Ryan plan, which basically is a medical voucher for the elderly of approx. $6K per year to pay their medical bills. How generous of the GOP to those elderly who contributed the most to those plans during their working years. Go figure.
SENIORS - A VOTE FOR ROMNEY IS A VOTE FOR KEEPING YOU IN POVERTY!
If two thousand retired people, would plan to build a facility for their retirement. They could pool their money and buy land to build a retirement club where they could live and enjoy their retirement years.
two thousand people pooling $800.00 per month would generate $1,600,000.00 each month.
This would be enough to buy land, and build. They could have a wonderful place to live and have it paid for in a short time. this would let them keep more of their money and live good . It would not be out of their reach with $1, 600,000.00 dollars each month to do it with. Once it is paid for they would be able to live for much less much better.
Welfare recipients, who never work and think their main purpose in life is to have as many kids as possible,who in turn stay on welfare and have as many kids as possible and as soon as possible, are dragging this country down. Our current Government apparently wants this cycle to continue and is even encouraging our neighbors to the south to join in on the giveaway. The title of "Welfare President" is very fitting for Mr. Obama. He and the Democratic leadership will not be happy until the middle class is totally destroyed,since the middle class is their only true opposition to total control of this country and a communist socialist government.
What a shame. These percentages are unbelievably disheartening.
If you still have some time to prepare, work hard to avoid befalling this fate. Save diligently for your future self and plan well to be properly insured at all times. Fight hard to get the hell out of debt. Don't allow a complete stranger to control your future - if you don't take steps to educate yourself and get engaged in your future while you do have the opportunity to do so, fault will only lay at your feet.
If you aren't in that camp and had a misguided sense of security that has failed to measure up and left you exposed to great risk, I can't imagine how difficult it must be not having appropriate options to turn to. The stress alone would be enough to seriously ding your health and wellbeing. My hope is that many seniors that are at or below the poverty line have smart, caring and compassionate family to help.
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