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More Americans Are Entering Poverty as They Age

A staggering number of older Americans have fallen below the poverty line — including one in five single women and nearly a third of Hispanics

By Sudipto Banerjee

For a growing number of older Americans, the so-called golden years of retirement are being tainted these days by a harsh reality: poverty.
Between 2005 and 2009 (the most recent year for which statistics are available), the poverty rate among senior citizens increased with age. So did the number of elderly now considered to be living for the first time in poverty, defined in 2009 as annual income of less than $12,982 for a couple — or less than $10,289 for an individual — age 65 or older.
These findings are part of a recent Employee Benefit Research Institute (EBRI) study of poverty trends among Americans 50 and older. The analysis, based on the University of Michigan’s Health and Retirement Study, was sponsored by the National Institute of Aging. The full report appears in my article, “Time Trends in Poverty for Older Americans Between 2001–2009,” on the EBRI website.

(MORE: You Gave, Now Save: Help for Low-Income Americans Over 60)
Among the key findings:

U.S. poverty rates are highest for people 85 and older. Nearly 15 percent of Americans 85 and older were living in poverty in 2009 — the highest rate of all age groups. The poverty rate for citizens 65 and older was 10.5 percent.
The percentage of Americans ages 75 to 84 who are new to poverty recently doubled. In 2005, just over 3 percent of people in this age group fell into poverty. In 2009, that number was up to nearly 6 percent.
Older women have much higher rates of poverty than older men. Poverty rates for women 65 and older were nearly double those of men in the same age group in almost every year from 2001 to 2009. In 2001, the poverty rate for men 65 and older was roughly 6 percent, compared with 12 percent for women. By 2009, those rates had edged up to 7 percent for men and 13 percent for women.
Older singles are more likely to live in poverty than older couples. In 2009, the poverty rate for couples 65 and older was just 4 percent, compared with almost 16 percent for single men in that age group. And older single women are especially vulnerable: more than one in five single women 65 or older — 21 percent — lived in poverty in 2009.
There are sharp racial differences in the poverty rates of older Americans. From 2001 through 2009, the poverty rate has consistently been at least three times higher for Hispanics and African-Americans ages 65 and older than for whites 65+. In 2009, the poverty rate in this age group was 29 percent for Hispanics and about 25 percent for blacks; it was nearly 8 percent for whites.
(MORE: The Retirement Crisis Facing Blacks and Latinos)
Most older Americans in poverty have serious medical problems. About 70 percent of citizens living below the poverty line have suffered acute health conditions (defined as a diagnosis of cancer, lung disease, heart problems or stroke). By comparison, just 48 percent of those who are not impoverished have had such troubles.
Why Poverty Has Grown for the Elderly
What accounts for the mounting poverty rate among older Americans?
As people age, their personal savings and pension account balances become increasingly depleted and their medical expenditures tend to rise. Also, the rising poverty rates corresponded to the two recessions that occurred during the last decade.
Although living in poverty is painful no matter what your age, it’s especially difficult for the elderly, whose options for escaping destitution are limited.
They typically have fewer employment opportunities than younger people and may be held back from generating income by health issues. (In another Next Avenue article, contributor Chris Farrell offers suggestions on how to avoid outliving your money.)
Programs like Social Security were created to reduce the probability that Americans would fall into poverty during old age. Yet a significant number of seniors — especially Hispanics, African-Americans and single women — still struggle with poverty. Detailed poverty data for the elderly is not yet available for 2010, 2011 or 2012, but the U.S. Census Bureau estimates that the poverty rate for Americans 65 and older edged up from 8.9 percent in 2009 to 9.0 percent in 2010. So the tragic problem continues.

Sudipto Banerjee is a research associate at the Employee Benefit Research Institute (EBRI), where he has published groundbreaking analysis of the economic aspects of retirement, ranging from the growing number of Americans in poverty to early withdrawals from 401(k)s and IRAs to the spending patterns of elderly Americans to the effect of nursing home stays on the assets of their residents. Read More
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