Tuesday, May 22, 2012

poor old America

Growing numbers of older Americans are spending their retirement years in poverty, according to a recent Employee Benefit Research Institute study. 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.

One of the biggest drivers of poverty in old age is failing health and the associated medical costs. Most retirees living below the poverty line (70 percent) have suffered acute health conditions such as cancer, lung disease, heart problems, or stroke.

"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 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."

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 that of men in almost all years between 2001 and 2009. In 2009, poverty rates were 7 percent for men and 13 percent 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.

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 could be limited by health issues.

The Urban Institute expects retirement income inequality to increase dramatically over time.

Source

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