Posted on January 19, 2020
Barely getting by on a fixed income. Choosing between food and medicine. Aging into poverty. There’s a catalog of clichés to describe how the golden years are often anything but.
Ten years ago, researchers on aging and demographics decided to put some hard numbers behind the hackneyed phrases, in the hope that seeing the actual bottom lines of present-day older adults could enlist all generations in working toward a sounder financial future for all.
The Gerontology Institute at the University of Massachusetts- Boston has calculated a quantifiable quality-of-life measure called the Elder Economic Insecurity Index. This searchable tool, called the Elder Index, allows users to obtain cost-of-living estimates that account for geography, health and housing status.
This data – recently updated with more current figures – calculates the income threshold that older adults in every county and state need to pay for their basic needs – food, housing, utilities, transportation, health care and household items such as clothing, hygiene items and cleaning supplies.
New Jersey – few will be surprised to hear – ranks among the country’s more expensive places for older adults to live. More than half of those over 65 and living alone in the Garden State – and nearly a quarter of elder couples – are classified as “economically insecure,” meaning they lack enough income for life’s basics.
Assuming good health, a single, retirement-age adult renting in New Jersey needed an annual income of $29,616, while a couple needed $40,128, just to get by last year. Those numbers have steadily risen since the last time the index was updated in 2016. Those in good health who own a home with a mortgage faced the highest expenses – $41,292 annually for a single and $51,804 for a couple; while healthy elders who own their homes outright were able to get by with $28,056 as a single and $38,568 as a couple.
The Elder Index is an important measure of older adults’ abilities to “age in place” in dignity and comfort, which is the primary goal of the expanding age-friendly movement in New Jersey.
“Across New Jersey, older adults are routinely outliving their resources,” said Julia Stoumbos, director of aging-in-place programs for The Henry & Marilyn Taub Foundation, which funds six age-friendly community initiatives in Bergen County. “For many people, these financial struggles come as a surprise because they have a pension or money saved up, and they thought it would be enough.
“Often it is people who have lived their lives on middle incomes as teachers, nurses, accountants and small business owners – expecting to be comfortable throughout their lives – who find themselves running out of money in their later years, forced to make difficult financial decisions.” Stoumbos added.
As in past years, while all of older adults’ costs rose, housing expenses in New Jersey represented the largest and most unaffordable expense category in 2019, because of the state’s high home prices and rents and its highest-in-the-nation property tax rate.
“New Jersey to me has always stood out in terms of the housing piece, particularly the property taxes, which keeps costs high even for elders who own their homes without a mortgage,” said Jan Mutchler, director of the Gerontology Institute’s Center for Social & Demographic Research on Aging.
The Elder Index was devised to address the inadequacies of the federal government’s poverty index, a measure that doesn’t account for regional differences in cost-of-living and other financially relevant factors such as housing status or poor health.
“We really needed a more accurate measure,” Mutchler said. “What we hope is that this data helps raise awareness about the high numbers of elders who are struggling with basic living expenses.”
The updated index figures reveal that in every state, more than four out of 10 older adults are at risk of not being able to afford basic needs, meaning many will run through whatever meager savings they have. Those who are physically able might need to keep working, while others may begin to deprive themselves of food, health care, or the help they need to be safe in their homes, Mutchler speculates.
Leaders of age-friendly communities have sought to use the elder index figures to educate younger generations about future life on a fixed income. In Bergen County, for example, the state’s most expensive county to grow old in, it’s clear from the Elder Index that the affordability problem starts long before older adults reach retirement age.
About 30 percent of retirement-age adults in New Jersey live solely on their monthly Social Security checks, with no other pension or supplemental income. But in every New Jersey county, the average Social Security check isn’t large enough to pay even three-quarters of the basic elder index costs of a single who rents
With people living longer and the costs of treating the common chronic diseases of aging rising, few in today’s middle class can hope to adequately insulate themselves against poverty, especially if they lack affordable housing or suffer a health or other emergency.
In Bergen County, for example, a single older adult renter needs a minimum of $32,376 a year to cover basic expenses, while the average annual Social Security benefit in Bergen is only $20,273 a year.
“It’s important for community and government leaders to have an accurate picture of how many older adults – including many people who lived financially secure lives when they were younger – are in financial stress,” Stoumbos said.
North Jersey’s high housing costs are a huge reason that many older adults head into retirement financially unprepared.
Housing costs represent nearly half – $1,201 – of the $2,468 worth of monthly expenses that a single older-adult renter faces just to live a no-frills lifestyle in Bergen County. For an older couple with a mortgage in Bergen County, housing costs take an even bigger bite of monthly expenses – 63 percent, or $2,174, of the average of $3,441 they face in monthly expenses, according to Elder Index estimates.
That’s why leaders of age-friendly movements are partnering with affordable housing advocates in their campaigns to increase the state’s supply of low and moderately priced homes so that people of all ages – and income brackets – can put money aside for their future needs.
Government is often resistant to policy changes that could lead to more affordable housing and increased financial and other assistance to older adults. But the irony is that government programs such as Medicare and Medicaid could end up footing a much higher bill if cash-strapped older adults end up in the emergency room because they stopped taking their expensive medicines, or if they move into nursing homes despite having been well enough to be cared for less expensively at home.
“It’s far better for people to age in their homes and communities, where their care costs less and they have the support of friends and loved ones,” Stoumbos said. “That’s not only the more age-friendly approach, it’s also the more affordable approach for individuals and for the systems that were designed to support them.”
Old age need not be synonymous with poverty for 40 percent of the country’s older adults, a percentage that will likely grow unless we revamp programs intended to aid and care for retired adults and work together toward safe and affordable homes for all.
Our alliance is continually seeking to increase public awareness and improve public policies, while recruiting more advocates, as we try to tackle the many cost-of-living challenges of growing old. We need a bigger coalition, or we’re going to end up with more depressing cliches.