At first glance, you might think New Jersey was doing pretty well in 2010. According to federal guidelines, only 7 percent of its residents age 65 and older were living in poverty. But a study primarily funded by the Silver Century Foundation paints a much more disturbing picture\u2014in the same year, nearly 43 percent of the state\u2019s elders who lived independently in the community couldn\u2019t afford life\u2019s basic necessities: housing, health care, food, transportation and other essentials such as clothing.<\/p>\n
How can these numbers be so far apart?<\/p>\n
The federal poverty guidelines are based entirely on food costs, using a formula unchanged since the 1960s when experts estimated that families spent a third of their budgets on groceries. The experts multiplied the price of a frugal diet by three to establish a poverty threshold.<\/p>\n
Though that threshold updates annually, it\u2019s still based solely on the cost of food\u2014specifically, the current cost of the same minimal meal plan considered barely adequate more than 40 years ago\u2014and it doesn\u2019t take into account other essential living expenses. Today Americans spend less than one-tenth of their income on what they eat; most older people find that housing and health care claim much bigger chunks of their money.<\/p>\n
There\u2019s another important problem, as well: the poverty threshold is the same whether you live in rural Alabama or Manhattan, though the cost of living can vary enormously from place to place.<\/p>\n
As she struggles financially, Antonia works at keeping her spirits up.<\/p>\n
When Social Security Is All You Have<\/strong><\/p>\n More than a quarter of New Jersey\u2019s elders have no income except their Social Security. Antonia BiGangi is one of them; her monthly benefit of $1,080 is all the income she has to live on.<\/p>\n Before her husband died, the two of them managed quite well. They had Social Security plus his pension. His health insurance covered both and cost them nothing.<\/p>\n Ed BiGangi had started his work life quite young, and his job with New York City\u2019s Department of Sanitation permitted him to retire after 20 years. He was 46 when he stopped working. At the time, he was given a choice: he could take his full pension and it would end when he died, or he could accept a smaller amount so that if he died first, his wife would continue to receive some benefits. Antonia, a bookkeeper, loved her own job and intended to go right on working. The decision seemed like a no-brainer.<\/p>\n \u201cIt was amicable between the two of us not to put me down as his beneficiary in the pension,\u201d she said. \u201cWe didn\u2019t think of 35 years down the line.\u201d<\/p>\n After Angela herself retired in her 60s, they sold their house and bought a New Jersey condo. But Ed died in 2011.<\/p>\n Antonia was devastated. They\u2019d been together since they were 16.<\/p>\n \u201cWhen they say love at first sight, the love of your life, that\u2019s who he was: Mr. Wonderful,\u201d she recalled.<\/p>\n With his death, she lost not only the income from his pension but his health insurance\u2014and she had lung cancer. Her monthly check from Social Security wasn\u2019t nearly enough. According to the Elder Index, as a single person who owned a home with no mortgage, she needed almost $22,000 a year to pay for essentials. That was far more than the $12,960 she was entitled to from Social Security at that time.<\/p>\n Finally, a friend told Antonia about Community Services Incorporated. Caseworkers there helped her identify government subsidies available to her and apply for them. Subsidies have now reduced what she pays for Medicare and for her medications. She\u2019s waiting to hear about a fuel subsidy and planning to apply for food stamps. Antonia didn\u2019t qualify for Medicaid because she has some assets, but she\u2019s burning through her modest savings despite the subsidies, which means eventually she\u2019ll be accepted for Medicaid.<\/p>\n As she struggles financially, Antonia works at keeping her spirits up.<\/p>\n \u201cMy faith is strong,\u201d she said, \u201cand I tell this to my children every day: if we\u2019re going to be all doom and gloom, then we\u2019ll sink. Whatever comes our way, it\u2019s how we handle it that counts.\u201d<\/p>\n<\/div>\n Despite these flaws, the federal poverty guidelines determine whether individuals and families are eligible for a number of benefits, including food stamps and some state health insurance programs. Over the years, many experts have suggested more plausible ways to measure poverty but there\u2019s been no consensus on how to do it.<\/p>\n A More Realistic View<\/strong><\/p>\n In a recent effort to establish more realistic standards for what life\u2019s basic necessities cost older people, a Washington, DC, nonprofit group created the Elder Economic Security Standard Index (also known as the Elder Index).<\/p>\n Wider Opportunities for Women (WOW) worked with the Gerontology Institute of the University of Massachusetts to determine the least amount of income older Americans need to live independently\u2014to age in place\u2014county by county, nationwide.<\/p>\n The Elder Index has several goals. Primarily, it\u2019s an attempt to improve public policies by providing real information about what elders need and to guide agencies that serve seniors. It\u2019s also useful to individuals who want to help their parents make financial decisions, or those who wonder whether they can afford to retire, or who hope to identify a community with a lower cost of living. Housing consumes the biggest portion of the budget for most older people in good health. Homeowners with a mortgage generally spend the most for shelter; renters come next, then homeowners without a mortgage. Researchers calculate these three options separately. They\u2019ve also studied the costs of long term care and the financial impact of poor health.<\/p>\n To figure out how many older Americans can afford the bare-bones essentials, the Elder Index calculates income, including pensions, Social Security and savings. It assumes individuals have Medicare and are completely retired with no support from relatives or government programs such as Medicaid. For both expenses and income, all calculations are based on data readily available from the government or from studies of the market.<\/p>\n Elder Index researchers have estimated the cost of necessities for older people<\/a> in every county in all 50 states. You can find this information online and it\u2019s sobering. In 2016, half of all US elders who lived alone and one out of four who lived with another elder couldn\u2019t afford life\u2019s essentials<\/a>\u2014they had incomes below the Elder Index. Overall, older Americans who lived alone needed between $20,000 and $31,000 a year to cover their basic expenses, depending on whether they owned a home outright, rented or had a mortgage. Married couples needed $31,00 to $41,000. <\/p>\n These findings highlight the problems with the federal guidelines, which set the poverty line in 2016 at $11,880 for those who lived alone and $16,020 for couples. In the opinion of WOW\u2019s leaders, these are not measures of poverty but of \u201cabject deprivation.\u201d <\/p>\n Seizing the Initiative<\/strong><\/p>\n The Elder Index is just numbers unless someone acts on it. WOW is supporting coalitions in 17 states, including New Jersey, to do studies of their own, to use the Elder Index to educate policy makers and the public and to guide outreach to elders who need help.<\/p>\n The New Jersey Foundation for Aging (NJFA) leads the way in New Jersey. In 2009 it analyzed the cost of living for elders in each of the state\u2019s 21 counties<\/a>, working with WOW.<\/p>\n That was a good beginning, but NJFA executive director Grace Egan wanted to know how many older people had incomes below the Elder Index, who they were and where they lived\u2014information that could provide a tool for planners and policy makers. In 2012, a grant from the Silver Century Foundation (SCF) enabled NJFA to undertake a second study<\/p>\n The new research, which analyzed the incomes and expenses of older citizens living independently in the community, revealed that almost 43 percent have incomes below the elder index<\/a>. This is important to know, Egan said.<\/p>\n \u201cFrequently, you hear that seniors are on easy street or that they don\u2019t have health care costs, but in fact they do,\u201d she said. \u201cMedicare is not free.\u201d<\/p>\n As with any other health insurance plan, Egan explained, there are premiums, copays and limits on coverage. Many older people wind up with high medical bills.<\/p>\n Women Are the Most Vulnerable Elders<\/strong><\/p>\n The 2012 study took results a step further, breaking down its statistics by gender. Kay Klotzburger, president of SCF, explained that the foundation is particularly interested in the predicament of older women because they\u2019re more vulnerable than men financially\u2014and they live longer.<\/p>\n \u201cAn overwhelming number of them are in poverty,\u201d Klotzburger said. \u201cThere\u2019s no group in this society I\u2019m more concerned about.\u201d <\/p>\n Nationally, 60 percent of all older women have incomes below the Elder Index, compared to 41 percent of older men. The men\u2019s incomes are almost 75 percent higher. In a Huffington Post interview, Donna Addkison, then president and CEO of WOW, called the problem \u201cstaggering.\u201d<\/p>\n “Older women are very quietly making decisions at home to split their pills in an attempt to stretch their medication,\u201d she said. \u201cThey’re choosing between having heat in the winter and having nutritious food on the table.”<\/p>\n A perfect storm of circumstances leave many older women financially vulnerable.<\/strong> <\/p><\/blockquote>\n The situation is most precarious for women of color, who are generally worse off than the men, though for both sexes, the statistics are dismal. These were the national averages for 2016 for older Americans who lived alone (couples tend to be somewhat better off) and had incomes below the Elder Index:<\/p>\n By comparison, half of non-Hispanic whites lived below the index. Researchers suggested that one reason older people of color had lower incomes than whites was that a higher percentage of them are women<\/a> \u2014for example, 61 percent of older African Americans are women, compared to just 55 percent of non-Hispanic whites.<\/p>\n The factors that make older women vulnerable financially add up to a perfect storm. Women work mostly in lower-wage industries or if they don\u2019t, they\u2019re often paid less than men for comparable jobs. They\u2019re less likely to have pensions, less likely to earn enough to be able to save for retirement and more likely to take time off for caregiving. Because Social Security is based on earnings, their benefits once they retire are correspondingly low.<\/p>\n
\nThe Elder Index calculates bare-bones expenses for:<\/p>\n\n
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