Elder Economic Security Standard Project for Massachusetts

THE ELDER ECONOMIC SECURITY STANDARD PROJECT BACKGROUND

Laura Henze Russell and Ellen A. Bruce

The Gerontology Institute at the University of Massachusetts Boston is developing an Elder Economic Security Standard (Elder Standard) to provide a realistic measure what it costs elders today to cover their basic necessities. The Elder Standard seeks to answer the question: how much does it really cost for older adults (aged 65+) to live independently, taking into account differing factors such as health, life circumstances, family status, and geography; and what happens to their costs as life circumstances change over time? Elder policy is at a crossroads, with the growth of the nation's "oldest old" and aging boomers as major demographic, economic, social and public health trends. The elder poverty "safety net" of Social Security and Medicare has markedly frayed in the face of rising living costs and uncovered medical costs. There is growing attention to the need for more affordable housing, accessible and affordable community-based long-term care services, property tax relief and fuel assistance for seniors, and increasing evidence of the significant growth of elder debt.

Rationale and Objectives of Proposed Project

In the United States, 12.4% of the population is 65 years of age or over. While this group grew by 12% between 1990 and 2000, elders 85 years of age and over grew by 38% during the same time period. Looking ahead, the aging of "baby boomers" will dramatically expand the elder population, with projections that it will nearly double over the next 25 years. The majority of elders are women: 60% of those 65 and older, and 74% of those 85 and older. Ten percent of elders in the U.S. lived in poverty in 2004 and nearly double in urban areas, yet 38% had incomes below 200% of the poverty line. Older women are at greatest risk, with 66% of non-married women living below 200% of the poverty line.

The federal poverty threshold is based on a 40-year old formula that assumes households spend one-third of their income on food. The federal poverty threshold significantly underestimates the incidence of poverty among the elderly, due to a number of methodological flaws. First, the poverty index does not take into account medical out-of-pocket costs, which the elderly disproportionately face. Second, housing and health costs have risen faster than food, which is now well under one-third of spending. Fourth, the poverty index is computed nationally, and thus does not reflect the wide range of housing and other cost differentials across the country. Fifth, the federal poverty threshold is lower for elders than for younger adults, because their food intake is lower.

The Elder Economic Security Standard Project has five basic objectives:

The Elder Standard is modeled on the Family Economic Self-Sufficiency Standard developed by Dr. Diana Pearce in collaboration with Wider Opportunities for Women. It will be adapted to the specific needs and circumstances of elder households. For elders, the question is not that of earning enough to be self-sufficient, but of whether retirement income from all sources: pension (if any), Social Security, retirement savings and other income covers the cost of living in the community at a modest level.

Russell and Bruce have developed a methodology and format that will present a set of "baseline" Standards for elders, followed by sections that illustrate the impact of changing life circumstances such as health status and need for long term care. It will also demonstrate the impact of seniors not having enough income to fully covers their living costs: spend-down of assets (if any), increasing debt which further inflates future living costs, relying on public and private assistance, and/or going without which jeopardizes elders' health and housing, independence and well-being, nutrition and other necessities.

Looking Ahead

A growing number of organizations have endorsed the Project; this will ensure widening interest in and expanding use of this benchmark as a tool for public awareness, education, advocacy, public policy, and program design on behalf of elders. Presentations to MA Legislative Caucus on Older Citizens Concerns, an Independent Aging Agenda Event on Economic Security in preparation for the White House Conference on Aging, American Society on Aging/National Council on Aging (ASA/NCOA) Conference, Gerontological Society of America (GSA) Conference, and an article in Aging Today have helped prepare the groundwork. The Elder Economic Security Standard for the Boston Area will be released at a Boston Foundation November/December 2006 Understanding Boston forum and the statewide report for Massachusetts in winter 2006-2007. The Institute has a contract with Wider Opportunities for Women of Washington, DC to develop and field test the Elder Economic Security Standard as a national prototype to prepare it for broader dissemination with a grant from the Retirement Research Foundation.

Summary

The Project's objective is to develop the Elder Standard as a visible, objective, and widely used cost-of-living measure for elders to help shape public discussion of elders' well being, public health, income security, and long term care needs; use it as a tool to educate seniors about their financial and life choices; and enable them to become more effective advocates on behalf of elders who need help. It is timely, as the aging of the population fuels "the graying of the United States" as a significant demographic, economic, social and public health trend. It is needed, as Social Security and Medicare do not provide the extent of support for elders that they did in the past, and elders across the nation are struggling with rising housing, property tax, fuel, and uncovered medical and long-term care costs. In communities across the state, economically vulnerable seniors are buffeted by rising costs, stagnant incomes, and increasing debt. The Elder Economic Security Standard provides a framework to help guide public and private decisions that will shape the health and well being of today's vulnerable elders, and impact the families and aging boomers that care for them, and follow in their footsteps.