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The “True Cost of Aging”: Many Seniors Can’t Afford Basic Necessities, but Federal Guidelines Are Inadequate, Outdated

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What does it mean to be a senior citizen in America living on the edge of financial disaster? While different states and regions have different gauges of financial need, one common standard used for many years is the so-called federal poverty level, designed to define where true economic insecurity begins. But now there is new data suggesting that the federal standard is woefully out of date, failing to paint an accurate picture of the precarious financial straits of millions of senior Americans.

This recent article from Kaiser Health Newswritten by excellent reporter Judith Graham, describes the problem. Last year, the federal poverty threshold for a senior living alone was barely $13,000 per year – yet a more accurate and up-to-date standard shows that seniors making far more than that are barely able to make ends meet. These older Americans are often one illness or accident away from complete financial collapse.

Precarious Finances Affect High Percentage of Seniors

Judith Graham’s Kaiser article spotlights an 81-year-old from Maine named Fran Seeley, who, Graham writes, “doesn’t see herself as living on the edge of a financial crisis. But she’s uncomfortably close.” Seeley, a retired teacher, earns just over $1,200 each month from Social Security and a modest IRA. A reverse mortgage on her home yields $400 monthly.

“So far,” Graham writes, “Seeley has been able to live on this income — about $19,300 a year — by carefully monitoring her spending and drawing on limited savings. But should her excellent health worsen or she need assistance at home, Seeley doesn’t know how she’d pay for those expenses.” 

Seeley is hardly alone, Kaiser reports. “More than half of older women living alone — 54 percent — are in a similarly precarious financial situation: either poor according to federal poverty standards or with incomes too low to pay for essential expenses. For single men, the share is lower but still surprising — 45 percent.” That, says Graham, is based on what she calls “a valuable but little-known measure of the cost of living for older adults: the Elder Index, developed by researchers at the Gerontology Institute at the University of Massachusetts-Boston.”

New Effort to Help Seniors in Financial Straits

Today, Graham writes, there’s a new effort to help seniors by getting federal and state officials to adopt the Elder Index as a more accurate way to determine eligibility for all sorts of financial assistance. “A new coalition, the Equity in Aging Collaborative, is planning to use the index to influence policies that affect older adults, such as property tax relief and expanded eligibility for programs that assist with medical expenses,” says the article. So far, the Equity in Aging Collaborative includes twenty-five prominent aging organizations.

Ramsey Alwin, head of the National Council on Aging, an organizer of the coalition, told Graham that the goal of the collaborative is to trigger a robust dialogue about “the true cost of aging in America,” which many agencies fail to appreciate. As the Kaiser article explains, Bottom of Formthe Elder Index uses databases for every county in the U.S. to calculate the cost of health care, housing, food, transportation, and miscellaneous expenses for seniors. “It represents a bare-bones budget,” Graham writes, “adjusted for whether older adults live alone or as part of a couple; whether they’re in poor, good, or excellent health; and whether they rent or own homes, with or without a mortgage.”

“Eye-Opening” Results from Applying the Elder Index

The director of the group that developed the Elder Index at the University of Massachusetts reported that the new analysis of the cost of aging produced eye-opening results. “In 2020, according to data supplied by Jan Mutchler, director of the Gerontology Institute, the index shows that nearly 5 million older women living alone, 2 million older men living alone, and more than 2 million older couples had incomes that made them economically insecure,” Graham reports. And that was before today’s inflation rate which stands at a 40-year high.

While the federal government uses federal poverty thresholds to calculate eligibility for many forms of aid, the Elder Index shows the inadequacy of that standard. “Nationally and in every state, the minimum cost of living for older adults calculated by the Elder Index far exceeds [the federal standard],” says Graham. “One national example: The Elder Index estimates that a single older adult in good health paying rent needed $27,096, on average, for basic expenses in 2021 — $14,100 more than the federal poverty threshold of $12,996. For couples, the gap between the index’s calculation of necessities and the poverty threshold was even greater.”

 ( The full report plus state-by-state data can be found here.)

Poverty Standards Govern Many Forms of Assistance

In spite of the reality of rising costs, federal guidelines lag far behind economic reality. “[E]ligibility for Medicaid, food stamps, housing assistance, and other safety net programs that help older adults is based on federal poverty standards,” says the Kaiser report, “which don’t account for geographic variations in the cost of living or medical expenses incurred by older adults, among other factors.” (As Graham adds, “This isn’t an issue for older adults alone; the poverty measures have been widely critiqued across age groups.”)

“The poverty rate just doesn’t cut it as a realistic look at the struggles older adults are having,” William Arnone, CEO of the National Academy of Social Insurance, told Graham. “The Elder Index is a reality check.”

Myth that Social Programs Cover All Costs for Seniors

“There’s a myth that Social Security and Medicare miraculously take care of all of people’s needs in older age,” said Alwin, of the National Council on Aging. “The reality is they don’t, and far too many people are one crisis away from economic insecurity.” This was brought home clearly last April when researchers at the University of Massachusetts showed what Social Security benefits actually cover.

In spite of public perception that seniors can be fully secure on Social Security, the analysis showed that the program covers “only a fraction of what older adults need for basic living expenses,” says the article: “68 percent for a senior in good health who lives alone and pays rent and 81 percent for an older couple in the same situation.” As a result, the article adds, “Organizations across the country have been using the Elder Index to convince policymakers that older adults need more assistance.”

Graham cites major new initiatives to roll back property taxes in New Jersey and to raise the Medicaid eligibility threshold in New York. Senior advocates at one agency in San Diego have used the new poverty data to double production of home-delivered meals, to more than 1.5 million annually.

Don’t Wait for the Feds to Act

The Kaiser article acknowledges the challenge of expanding senior relief programs at a time of fiscal uncertainty. But the research strongly suggests that the present standard is completely inadequate. “We should be using a reliable measure of economic security and at least know how well the programs we’re offering are doing,” one official told Graham.

Graham ends her article by revisiting case of Fran Seeley up in Portland, Maine. Based on the Elder Index, an older adult who is in excellent health, lives alone, owns a house, and doesn’t pay a monthly mortgage needs $22,560 a year to live on. That’s $3,200 more than Seeley’s annual income and $9,500 above the federal poverty threshold. Clearly that gap has to be made up somewhere.

But as Rajiv Nagaich of AgingOptions would put it, sitting around until Uncle Sam changes the rules could be a long wait. “I do feel bad for seniors who already have reached their 70s and 80s and find themselves in a tough place financially,” Rajiv says. “For them it’s often too late to make a meaningful change in their financial picture. But,” he adds, “what about the rest of us?”

In Rajiv’s view, the secret is to start planning early, and to do it carefully “so that you don’t get to the end of your life afraid you’ll outlive your assets.” A combination of a robust LifePlan and a financial dashboard, put in place many years before you retire, can make the difference between a secure retirement and one in which (as Rajiv says) “it always feels like the wolf is at the door! You don’t want to end up that way, and at AgingOptions we can help make sure that’s not your story.”

My Life, My Plan, My Way: Get Started on the Path to Retirement Success

At AgingOptions we believe the key to a secure retirement is the right retirement plan – yet statistics show that 70 percent of retirement plans fail. That’s why for nearly two decades we’ve been dedicated to the proposition that a carefully-crafted, fully comprehensive retirement plan is the best answer to virtually any contingency life may throw your way as you age.  Our slogan says it all: My Life, My Plan, My Way.

When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age?

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

(originally reported at

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