Circumstances for retired seniors have gone from bad to worse, according to a July 2011 Research and Policy Brief, as household budgets are increasing while household assets drain away.
The Institute on Assets and Social Policy (IASP) released a brief titled From Bad to Worse: Senior Economic Insecurity on the Rise, which examines the economic security of seniors and an increasingly common fear of outliving resources.
Declining household assets, inadequate household budgets, and increasing housing costs are the three main trends driving economic insecurity, says IASP.
The number of households experiencing financial burden due to increased housing expenses rose to 50% in 2008, defined by the federal standard as 30% or more of a senior’s annual income going toward housing. And although many seniors have equity in their homes, says IASP, many of those homes require extensive—and expensive—maintenance, while other seniors are renters and don’t own their own properties.
Additionally, retirement assets are no longer as substantial as they once were, especially with the shift from defined-benefit plans to defined-contribution plans, and many senior households end up with a negative balance after taking care of necessary expenses.
Overall, economic insecurity among senior households experienced a notable rise from 27% to 36% between 2004 and 2008, the IASP found through using the Senior Financial Stability Index. And, says IASP, this began to happen even before the Great Recession, leaving the concern that seniors’ future prospects may get even worse.
Not only are 36% of seniors economically insecure, but also 40% of seniors are classified as financially vulnerable, meaning they’re neither secure nor insecure, for a total of 76% of seniors in what IASP calls an “economically precarious position.” And minorities have been hit especially hard, with 52% of African-Americans and 56% of Latinos experiencing economic insecurity.
Nearly half of single female seniors are at risk, too, at 47%, as women generally outlive men and thus face a higher chance of outliving their resources. This, says IASP, is especially true since women generally earn less than men and often spend less time in the workforce due to raising families and fulfilling caregiving duties.
In order to alleviate and even reverse these trends, says IASP, action must be taken. However, contrary to some proposals to “dramatically alter” Social Security or Medicare benefits, IASP says it’s better to work on policies and interventions designed to reduce expenses and boost income.
Suggestions along these lines include increasing asset-building opportunities throughout the life-course, expanding low-income housing options for seniors, and strengthening Social Security for vulnerable groups.
Read the full brief here.
Written by Alyssa Gerace