Recent surveys are showing that while overall poverty rates in the United States are falling, they are rising for Americans over age 65.
According to the latest U.S. Census Bureau data, the share of older people (over 65) living below the poverty line rose to 10.3% in 2021, up from 8.9% in 2020. The increase means that an additional 1 million older adults have fallen below the poverty threshold, bringing the total number of seniors in that unfortunate category to nearly 6 million, according to an analysis by the National Council on Aging (NCOA).
Another organization, The Senior Citizens League, a Washington-based advocacy group, reports that in surveys taken in 2021 and 2022, a rising number of retirees report that they have spent through emergency savings and have applied for safety net programs. In that survey, the number of survey participants who say they have applied for SNAP or visited a food pantry over the past 12 months is 33% compared to 22% a year ago. The number who say they have applied for rental assistance has almost doubled, from 5% in 2021 to 9% in 2022, and those who have applied for heating assistance up from 10% to 17%.”
It’s hardly a coincidence that this deterioration in the finances of seniors has corresponded with a sharp jump in the number of seniors who must rely on credit cards to meet even their most basic needs. This is a trend that has been accelerating for years
Retirement finances used to be compared to a three-legged stool, consisting of personal savings, a company pension and Social Security. Two of those legs (savings and pensions) are collapsing and the third (social security) is beginning to waver.
A report from the Fed shows that median retirement savings for seniors has fallen to below $200K: Ages 55-64: $134,000, Ages 65-74: $164,000 and Ages 75+: $83,000. This is placing more and more seniors at financial risk as they are now living longer than prior generations.
What about pensions? According to the Pension Rights Center, a Washington, D.C.-based nonprofit, nonpartisan organization, less than a third of Americans enjoy some form of a defined benefit retirement plan. It says the number of defined plans offered by employers fell by 58% between 1990 and 2018. Unless you are lucky enough to have a pension—a guaranteed monthly income stream from an employer, the term “golden years” is far more likely to be a misnomer.
Last, at some point, Congress must get its act together and properly address Social Security and Retirement Savings. A properly structured sliding scale of benefits based upon actual need will be required short term to assist the generation in the most dire need. Piecemeal safety net programs may simply not be sufficient. We must also look at the front end – Retirement Savings Rates of younger generations – to ensure that those born after 1980 are properly planning for their later years. The system is broken and kicking the can down the road will no longer be suffice.