The ‘True Cost of Aging’ indicator shows that many elderly people cannot afford basic necessities

Fran Seely, 81, does not see herself on the brink of a financial crisis. But it is uncomfortably close.

Each month, Seeley, a retired teacher, gets $925 from Social Security and $287 from an Individual Retirement Account. To make ends meet, she took out a reverse mortgage on her home in Portland, Maine, which brings in $400 a month.

So far, Selye has been able to live on that income – about $19,300 a year – by carefully monitoring her spending and relying on limited savings. But if her excellent health worsens or she needs help at home, Celie does not know how she will pay for these expenses.

More than half of older women who live alone – 54% – have a similarly precarious financial situation: either poor by federal poverty standards or with incomes too low to pay basic 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 University of Massachusetts Institute of Gerontology in Boston.

A new coalition, the Equity in Aging Collaborative, plans to use the index to influence policies that affect seniors, such as property tax exemption and expanded eligibility for programs that help with medical expenses. Twenty-five prominent aging organizations are members of the cooperative.

Ramsey Alwyn, president and CEO of the National Council on Aging, one of the coalition’s organizers, said the goal is to stoke a vigorous dialogue about “the true cost of aging in America,” which remains underappreciated.

Nationally, and for every state and county in the United States, the Aging Index uses different public databases to calculate the cost of health care, housing, food, transportation, and miscellaneous expenses for seniors. It represents a simple budget, adjusted according to whether the elderly live alone or as part of a couple; whether they are in poor, good or excellent health; And whether they rent or own homes, with or without a mortgage.

The results of the analyzes are amazing. In 2020, according to data provided by Jan Machler, Director of the Institute of Gerontology, the index showed that nearly 5 million older women live alone, 2 million older men live alone, and more than 2 million older couples have an income that makes them irrelevant. Economically safe. .

Those estimates were before the inflation rate rose to more than 9% – its highest level in 40 years – and older people continued to lose their jobs during the second and third years of the pandemic. “With these stressors put in place, more people are suffering,” Machler said.

Nationally and in every state, the minimum cost of living for seniors calculated by the Seniors Index exceeds federal poverty thresholds, which are used to calculate official poverty statistics. (Federal poverty thresholds used for the Aging Index differ slightly from the Federal Poverty Guidelines. Data for each state can be found here.)

One national example: The Aging Index estimates that an older, healthy adult paying rent would need $27,096, on average, for basic expenses in 2021 — $14,100 more than the federal poverty threshold of $12,996. For couples, the gap between necessities in the index and the poverty threshold was larger.

However, eligibility for Medicaid, food stamps, housing assistance, and other safety net programs that help seniors are based on federal poverty standards, which do not take into account geographic differences in the cost of living or medical expenses incurred by seniors, among others. Other things factors. (This is not a problem for older people alone; measures of poverty have been widely criticized across age groups.)

“The poverty rate is not only reducing it as a realistic view of the hardships faced by older people,” said William Arnoni, chief executive of the National Academy of Social Security, one of the members of the new coalition. “The Elderly Index is a reality check.”

In April, University of Massachusetts researchers showed that Social Security benefits cover only a fraction of what seniors need to cover basic living expenses: 68% for seniors who are healthy, live alone and pay rent, and 81% for an older couple at the same time. Situation.

“There is a myth that Social Security and Medicare miraculously take care of all the needs of people in old age,” said Alwyn, of the National Council on Aging. “The truth is they don’t, and a lot of people are one crisis away from economic insecurity.”

Organizations across the country are using the Older People Index to convince policy makers that older adults need more help. In New Jersey, where 54% of seniors are economically insecure according to the index, advocates have used the data to protect property tax-exempt programs for seniors during the pandemic. In New York, where nearly 60% of seniors are economically insecure, advocates have persuaded the legislature to raise the Medicaid income eligibility threshold.

In San Diego, where 40% of seniors are economically insecure, Serving Seniors, a nonprofit agency, convinced county officials to use pandemic-related stimulus payments to expand senior nutrition programs. As a result, the agency was able to double its homemade meal production, to more than 1.5 million annually.

Paul Downie, president and CEO of Service for Seniors, said officials are often wary of the financial impact of expanding programs. But he said, “We should use a reliable measure of economic security and at least know how well our programs are doing.” By law, California area agencies on aging use the Seniors Index in their planning process.

Maine ranks fifth in the list of states ranked by the proportion of seniors living under the Seniors Index, 56%. For someone in Fran Seeley’s case (a healthy senior who lives alone, owns a home, and doesn’t pay a mortgage monthly), the index is $22,560 a year is necessary—more than $3,200 of Sealy’s annual income. and $9,500. above the federal poverty threshold.

A look at Sealy’s budget reveals how quickly necessary expenses build up: $2,041 a year for Medicare Part B (this is deducted from her Social Security check), $4,156 for property and storm water taxes, $390 for home insurance, $320 for oven cleaning, $1,440 for heating, $125 for water, $500 for gas and electricity, $300 for property maintenance, $1,260 for phone and internet, $150 for vehicle registration, $640 for car insurance, $840 for gas at current rates, and $300 for vehicle maintenance, and $4,800 for food.

Total: $17262. This does not include the cost of medication, clothing, toiletries, any type of entertainment or other incidentals.

Sealy’s remarkable luxury is the care of four cats, which she describes as “the light of my life.” Their annual wellness checkups cost about $400 a year, while their food costs about $1,080.

Now that inflation is making her budget tighter, “that means I have to cut any way I can. I find myself going to the stores and saying, ‘No, I don’t need to,'” said Seely. in my home or get sick. I know medical expenses can wipe out my money in no time.”

We’re excited to hear from our readers about the questions you’d like answered, the problems you’ve encountered in your care, and the advice you need in dealing with the healthcare system. Visit khn.org/columnists to submit your requests or advice.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with policy analysis and survey, KHN is one of the three major drivers of KFF (Kaiser Family Foundation). KFF is a non-profit organization that provides information on health issues to the nation.

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