The percentage of older Americans living below the poverty line has been growing steadily since 2005, and many are falling into poverty as they age and spend down their savings, especially on healthcare costs and nursing homes, according to an April 2012 EBRI (Employee Benefit Research Institute) analysis of a health and retirement study.
Between 2005 and 2009, poverty rates began rising in correlation to the economic recession; during this period, more seniors fell into poverty, with blacks, Hispanics, and single women facing higher poverty rates compared to other seniors.
As the population ages, medical expenses factor heavily into exhausting many seniors’ resources, and the chance of suffering a health condition (acute or otherwise) rose 45 to 55% for those beneath the poverty line, the EBRI study found.
For seniors living in poverty, 96% have experienced some sort of health condition (high blood pressure, diabetes, psychological problems, or arthritis) compared to 61.7% of retirees with incomes placing them above the poverty line.
“Medical expenditures go up for the elderly as they age and medical expenses have been rising over the past decade very rapidly,” says Sudipto Banerjee, a research associate at EBRI and author of the report. “A lot of people have to move to nursing homes, and nursing homes are very expensive. People who live there, they lose their income and assets very quickly.”
During tough economic times, many retirees end up spending down their assets too quickly, but Banerjee expects that the poverty rate will go back down as the economy improves.
Written by Alyssa Gerace