A terrible thing is happening to America’s seniors.
While overall poverty rates in the United States are falling, they are rising for Americans over age 65.
That’s according to the latest U.S. Census Bureau data, which says the share of older people 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).
“We are deeply dismayed,” says Ramsey Alwin, NCOA’s president and CEO, in a statement. “This increase shines a glaring spotlight on the fact that Social Security and Medicare, the bedrock of retirement security for so many, are not sufficient to lift all older adults above poverty.”
Also dismayed—but not surprised—is Mary Johnson of the Senior Citizens League, a Washington-based advocacy group. “The Census Bureau report confirms what we have been fearing,” she tells MarketWatch. “Our surveys in 2021 and 2022 have indicated that a rising number of retirees report that they have spent through emergency savings and have applied for safety net programs. In fact, 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. 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 cost of living. The current consumer-price index (CPI) shows inflation galloping along at an 8.2% annual rate. But as anyone who, well, eats, knows, one of most important components within the CPI—food prices—are rising a lot faster than inflation: 13.5% for the year ended in August, according to recent Labor Department data. And with temperatures falling, heating prices are rising even faster.
This one-two punch is higher than even the big 8.7% Social Security increase that seniors will get in January. Johnson says that this too, is part of the problem.
“Congress needs to address the adequacy of Social Security benefits,” she says. “More than half—54%—of our survey participants said they depend on Social Security benefits for 90% percent or more of their total income. The vast majority of the seniors we hear from are in very financially fragile situations. The development of one serious health condition threatens to wipe them out.”
That so many seniors are falling further behind reflects a disturbing trend that has been growing for years. Retirement finances used to be compared to a three-legged stool, consisting of personal savings, a company pension and Social Security.
That kind of retirement is about as antiquated today as the rotary phone and black and white TV. Take a look at the average retirement savings for older Americans, according to new data from Synchrony Bank:
- Ages 55-59: $223,493
- Ages 60-64: $221,451
- Ages 65-69: $206,819
Low as these figures are, they are averages. The more telling data is found among median retirement savings. The data this time comes from the Federal Reserve:
- Ages 55-64: $134,000
- Ages 65-74: $164,000
- Ages 75+: $83,000
Median, of course, means that half have less than these figures.
What about pensions? Please. This isn’t your father’s retirement and hasn’t been for a long time. 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.