For 401k sponsors and participants in need of a wake-up call, here’s a disturbing tidbit plan advisors might consider relaying: more than 7 million seniors lived in poverty in 2017.
“Payments from Social Security and Supplemental Security Income have played a critical role in enhancing economic security and reducing poverty rates among people ages 65 and older. Yet many older adults have limited income and modest savings,” the Kaiser Family Foundation (KFF) noted in a brief on Monday.
Within its summary, KFF analyzed data from the U.S. Census Bureau, which reports on two separate measures of poverty. Individuals 65 and older with an income below $11,756 are classified as living in poverty under the first, called the “official measure.”
The unofficial gauge, dubbed the “Supplemental Poverty Measure” (SPM), takes into consideration people’s region, homeownership status, monetary resources, financial liabilities, taxes and benefits (like food stamps), as well as medical spending.
Poverty estimates based on the SPM are higher than the official measure “largely due to the fact that the SPM deducts out-of-pocket medical expenses from income,” KFF explained.
Key findings of the analysis include:
- According to the official measure, 4.7 million seniors lived in poverty in 2017.
- According to the SPM, this number increased to 7.2 million.
- 15 million older adults had incomes under 200 percent of the poverty level based on the official measure.
- This number was 21 million based on the SPM.
- The poverty rate increased with age and was higher among women, blacks and Hispanics, in addition to those dealing with health issues, according to both measures.
- Under the official measure, 3 million women who are at least 65 lived in poverty versus 1.6 million men.
- These figures rose to 4 million and 2.7 million, respectively, under the SPM (based on 2015 to 2017 averages).
- In certain areas of the country, according to the SPM, no less than 15 percent of seniors lived in poverty: California, Florida, Hawaii, Louisiana, Maryland, New Jersey, New Mexico, Texas, Virginia and Washington D.C.
- Based on the official measure, this is only true of Louisiana and Washington D.C.
“In 2016, half of all people on Medicare had income less than $26,200 per person. This analysis provides current data…as context for understanding the implications of potential changes to federal and state programs that help to bolster financial security among older adults,” KFF concluded.
Jessa Claeys is a writer, editor and graphic designer.
