POVERTY & AGING IN AMERICA Profiles of the Low-Income Older Population

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1 POVERTY & AGING IN AMERICA Profiles of the Low-Income Older Population 2008

2 Mission Statement: The AARP Foundation is AARP's charitable organization dedicated to enhancing the quality of life for all as we age. We lead positive social change and deliver value to those 50 and older with emphasis on those at social and economic risk. AARP Foundation 601 E Street NW Washington DC

3 AARP Foundation POVERTY & AGING IN AMERICA: Profiles of the Low-Income Older Population 2008 Chart Book Prepared in partnership with: AARP Public Policy Institute David Baer Carlos Figueiredo George Gaberlavage Ann McLarty Jackson Leigh Purvis Sara Rix Alison Shelton Neal Walters Ke Bin Wu

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5 Foreword AARP Foundation Board of Directors N. Joyce Payne, Chair George Rowan, Vice-Chair Bruce Corson Joanne Handy Madeline Moore-Burrell David Nelson Tom Nelson Joan Ruff Fernando Torres-Gil Art Ulene Today s crisis in the financial sector, skyrocketing gas prices and rising food costs challenge the welfare of the average American households and further sideline individuals 50+ who are living in or at the brink of poverty -- millions of people who silently sit on the knife s edge of economic distress. In July 2008, the AARP Foundation convened a symposium on poverty and aging in America. This marked our new initiative to open a dialogue about the hardships that affect older people living in poverty. It was also an opportunity to bring together a range of individuals and institutions - including government and the media, academics, grassroots and national organizations, the public and private philanthropic sector - to discuss poverty indicators and interdisciplinary strategies to combat economic distress in our communities across generational lines. To coincide with the symposium, we released the Foundation s first annual chart book: Poverty and Aging in America: Profiles of the Low-Income Older Population. This chart book presents key economic and social indicators through an aging lens to examine the special challenges around financial security for older Americans. The chart book documents the precarious situation of older persons with insufficient retirement income and/or employment opportunities; inadequate assets and financial management tools; limited health insurance coverage and access to key public benefits; and, high levels of disability and poor health. We know that poverty is not a statistic it is personal. It affects real people who live, hope and dream just as we do. Until we understand the true scope of poverty and near poverty, we cannot create the strategies to combat what seems like an intractable problem. While AARP and the AARP Foundation strive to address many risk factors for poverty, we cannot do it alone. Our series, Poverty and Aging in America, seeks to ensure a robust dialogue on the issues that place millions of older people at risk of falling into a cycle of poverty. By convening and joining together experts in poverty and financial security with aging advocates, we hope to pool our resources and stimulate informed discussions leading to durable public and private initiatives that make a real difference in the lives of poor older persons, children and families. The AARP Foundation looks ahead to working closely with committed organizations to ensure that we have included the key indicators and benchmarks of economic wellbeing that need to be considered as part of our dialogue. With your help, we hope to build strategies around asset development, financial protections and access to benefits -- that leverage support and resources for low income individuals and communities of all ages. We look forward to input and insight from our colleagues and partners that will positively transform the financial security of our most vulnerable seniors and the quality of life for all as we age. Robin Talbert, President AARP Foundation

6 Table of Contents Introduction & Purpose 1 Principal Findings 2 Conclusions 7 Section 1: Demographic Characteristics of Persons Age Section 2: Findings from the Current Population Survey 13 Section 3: Findings from the Survey of Consumer Finances 43 Section 4: Selected National and State Housing Characteristics 67 Section 5: Selected Health Indicators 83 Section 6: Data from Consumer Expenditures Survey 91 Section 7: Methodology, Data Sources, and Assumptions 93

7 Introduction & Purpose Introduction The United States has made enormous strides in reducing poverty at older ages over the past several decades. In 1959, 35.2 percent of persons age 65+ had incomes below the poverty threshold. By 2006, the poverty rate for this age group had fallen to 9.4 percent. The most dramatic improvement occurred in the 1960s and 1970s when Congressional enhancements to Social Security the dominant source of income for older Americans increased benefits and introduced automatic cost-of-living adjustments. Yet the poverty rate for older persons in the United States has remained relatively stable at around 9 percent to 11 percent for the past decade. Moreover, the total poverty rate obscures wide variation by sex, race and ethnicity, and living arrangement. Women age 65+ had a poverty rate of 11.5 percent in 2006; that for men in the same age group was 6.6 percent. The poverty rate for older non-hispanic Whites was 7 percent, but for Hispanics it was 19.4 percent and for African-Americans, 22.7 percent. Rates were even higher for minority women, and older women living alone were among America s poorest residents. A focus on poverty rates alone overlooks the large number of near-poor older persons at risk of falling into poverty for any number of reasons the death of a spouse, unexpected health care expenditures, or rising utility bills, for example. One of the more restrictive definitions sets near poor or at risk at 125 percent of poverty. Using that cutoff, 3.4 million persons age 65+ in the United States were poor in 2006; another 2.2 million were near poor. It is not only the oldest of America s 50+ population who are poor. More than 4.4 million men and women ages 50 to 64 have incomes below the poverty line, and many others are only a catastrophe away from poverty. Not only do poor and vulnerable middle-aged families and individuals struggle to make ends meet today, they face a very bleak future in retirement unless something is done to help them now. Purpose To begin the process of developing a more detailed strategy for improving the poverty situation among the older population, the AARP Foundation commissioned this chart book to provide a clearer portrait of older persons living in poverty and those at risk of falling into poverty. This chart book will also compare those below poverty to one another and their more affluent counterparts in the older population. This profile is intended to provide key data on the social and financial status of these segments of the older population and to assist the initial discussions with the philanthropic community and others about their needs. Important additional purposes of the project are to: Identify areas for additional research and gaps in services for those older persons with incomes below poverty or at risk of falling into poverty, Encourage discussion and debate on issues that can lead to positive policy/systems change, and Inform decisions on the direction of AARP Foundation programs. 1

8 Principal Findings 2 Women Are Most At Risk of Falling into Poverty: More than 6 in 10 of older persons in poverty or at risk of falling into poverty are women. Almost one-fifth (19 percent) of older African-Americans are living in poverty compared to 6.5 percent of older Whites. In addition, almost one-quarter (24 percent) of African-Americans and 27 percent of Hispanics age 50+ are at risk of falling into poverty. 43 percent of persons age 50+ living in poverty live alone. Continuing to Work Increases Income and Helps Keep People Out of Poverty: Among persons age 50 to 64 living in poverty, only one-quarter are in the workforce. More than three-quarters of people in this age group with incomes at or above twice the poverty level are in the workforce. Women age 50 to 64 are less likely to be in the workforce than men the same age. At age 65+, African-Americans and Hispanics are more likely than Whites to be in the workforce. This may be due to the fact that Whites are more likely than other racial and ethnic groups to have retirement income from pension plans. Unemployment and Disability Are Serious Problems for Persons Age 50 to 64 in Poverty: About 16 percent of persons age 50 to 64 who are living in poverty report that they are unemployed but looking for work. More than one-quarter of African-Americans age 50 to 64 living in poverty report being unemployed but looking for work. Social Security Disability Insurance (SSDI) assists only about 1 in 10 persons age 50+ who report that a disability has affected their efforts to work.

9 Principal Findings (continued) Social Security Is Critical to Keeping People Out of Poverty: The poverty rate for persons age 65+ would have increased from 9.4 percent to 44.9 percent in 2006 without Social Security. Social Security is important to all racial and ethnic groups, although Hispanics are less likely to receive Social Security benefits than others. Older Persons Living in Poverty or At Risk are Unlikely to Receive Retirement Income from a Traditional Pension, 401(k) or Similar Plan: For older persons living in poverty the rates of receiving income from a traditional pension, 40l (k) or similar plan are very low. Older Whites are significantly more likely than older African-Americans and Hispanics to receive retirement income from a traditional pension, 401(k), or similar plan. Health Insurance Coverage is Limited for Persons Age 50 to 64 Living in Poverty: Only 64.7 percent of persons age 50 to 64 who are living in poverty have any public (Medicaid) or private health insurance coverage. Coverage rates for the unemployed age 50 to 64 are significantly lower than for all persons in this age range. Of persons in this age group living in poverty who report that they are unemployed, only 46.8 percent have any public or private health insurance coverage. Whites are generally the most likely and Hispanics are the least likely to have public or private health insurance coverage. Only one-half of Hispanics age 50 to 64 with income up to twice the poverty line have health insurance. Medicaid is very important for persons age 50 to 64 living in poverty. African-Americans and Hispanics rely on Medicaid at twice or more the rate of Whites. 3

10 Principal Findings (continued) 4 Older Persons Living Below the Poverty Line Rely Heavily on Public Benefits: Older persons living in poverty rely heavily on public benefits such as Medicaid, Supplemental Security Income, public housing, and food stamps, particularly among the group age 50 to 64. Women are generally, although not always, more likely than men to receive public benefits. A Majority of Older Households Own Homes but Many Have Problems Meeting Ownership-Related Expenses: Half of households age living in poverty and nearly two-thirds of households age at risk of poverty own their homes. Twothirds of both groups own their homes free and clear. Equity levels are relatively modest, however, and the expenses of ownership (principal, interest, taxes, insurance, and utilities) compared to income levels are high, especially for those with mortgages. Spending for shelter and utilities make up more than one-third of the average annual expenditures for families age 50+ living in poverty. In comparison, families age 50+ with incomes at or above twice the poverty level spent just 25 percent of their average annual expenses for these categories. The percentage share of average annual expenditures for utilities by families living in poverty and at-risk of poverty is almost twice that of families with incomes at or above 200 percent of poverty. At all income levels, persons age 65+ are more likely to own their homes than persons age Only one-third of African-Americans age 50 to 64 living in poverty own their homes compared to 60 percent of Whites in that same age and income group. The Low Net Worth of Older Families Living in Poverty Indicates a Lack of Financial Security: The median net worth of families age 50+ living in poverty is just $10,000. The net worth of African-American and Hispanic families age 50 to 64 is less than a fifth that of White families in the same age range. The net worth of families living in poverty headed by women age 50+ is only about a 10th that of families headed by men age 50+ living in poverty.

11 Principal Findings (continued) Older Families Living in Poverty and At Risk of Poverty Lack the Financial Cushion that Assets Provide: Families age 50+ living in poverty and those at risk of poverty have insignificant liquid assets. Total median financial assets of older families living in poverty are less than $1,000. African-American and Hispanic families age 50+ living in poverty have less than half the total median financial assets of Whites living in poverty. Total median financial assets of women age 50+ in all income groups is approximately half that of men. Older Families Living in Poverty or At Risk of Poverty are Much Less Likely to Own Accounts and Use Other Financial Services than Older Families with Higher Incomes: More than one-third of families age 50+ living in poverty do not have a checking account. Nearly half of African-American and Hispanic families age 50+ living in poverty lack checking accounts. 8 out of 10 families age 50+ living in poverty and six out of 10 families age 50+ at risk of poverty lack a savings or money market account. Whites age 50+ are twice as likely as Hispanics age 50+ and 1.5 times as likely as African-Americans in the same age group to own a savings or money market account. Nearly 6 out of 10 older families headed by women lack a savings or money market account. Ownership of retirement accounts or mutual funds (independent of retirement accounts) is negligible among families age 50+ living in poverty or at risk of poverty. Only about one-third of families age 50+ living in poverty and one-half of those at risk of poverty have life insurance. 5

12 Principal Findings (continued) 6 A Significant Percentage of Older Families Living in Poverty have Heavy Debt Burdens: Almost 1 in 5 families age 50+ living in poverty have debt payments in excess of 40 percent of their total income. The median credit card balance as a percentage of income is highest for older families living in poverty and those at risk of poverty. Nearly 10 percent of families age living in poverty have filed bankruptcy in the last 7 years. This is about twice the rate of families age with incomes at or above 200 percent of poverty. Persons Living in Poverty are More Likely to Experience Poor Health and have Problems Paying for Care: Persons age 50+ living in poverty are almost four times as likely as those living at twice the poverty level to categorize their health as poor rather than excellent. 41 percent indicated they experienced poor health more than a week in the past 30 days. Almost one-quarter of persons age 50+ living in poverty said they could not see a doctor within the last 12 months because of cost. 15 percent of persons age 50+ in the at-risk category could not see a doctor because of cost. The presence of risk factors such as obesity, diabetes, and hypertension are significantly higher among persons age 50+ living in poverty or at risk of poverty than for persons age 50+ with incomes at or above 200 percent of poverty. Those living in poverty and at risk of poverty also exercise less and undergo less frequent screenings (mammograms and colonoscopies) for early detection of diseases than those with higher incomes. Consumers living in poverty or at risk of poverty spend a higher percentage of their average annual expenditures on health care (10 and 12 percent respectively) than consumers age 50+ with incomes at or above 200 percent of poverty (8 percent).

13 Conclusions The overall portrait of persons age 50+ living in or at risk of poverty that emerges from this analysis is a population on the knife s edge of economic distress. The precarious situation of these older persons is due to a lack of retirement income and/or employment opportunities, inadequate assets and financial management tools, limited health insurance coverage and access to key public benefits, and high levels of disability and poor health. Furthermore, these harsh circumstances disproportionately impact women, minorities, and persons living alone. Yet even within this disturbing overall portrait, potential sources of strength, hope, and financial improvement can be discerned. For example, the fact that a significant percentage of people age 50 to 64 living in poverty report that they are unemployed also means that they are looking for work. They would thus likely be receptive to increased opportunities for employment. Indeed, as noted in this chart book, more than three-quarters of people with incomes at or above 200 percent of poverty are employed. There is no reason to believe that older persons living in poverty or at risk of poverty and who are able to work would be any less motivated to work than those with higher incomes, particularly if employment services included training for jobs offering better pay and benefits such as health insurance and retirement savings plans. For older workers with a disability that prevents them from working, a public benefits strategy to assist in overcoming barriers to claiming Social Security Disability Insurance would be especially helpful in preventing long-term income losses. Low-income workers often lack the resources necessary to obtain assistance in getting their government claims considered under the long application and appeals process. Similarly, the high homeownership rate among older households living in poverty and at risk of poverty and the fact that many of these homes are owned free and clear provide a basis to develop and implement an asset preservation and enhancement strategy. For example, strengthening protections against predatory mortgage lending practices can prevent the loss of home equity. This is especially important in low-income and minority communities where there has been heavy marketing of subprime loan products. At the same time, strategies to link older homeowners with programs for property tax abatement, home repair, and energy efficiency modifications could help reduce the ownership cost burdens identified in this chart book, while increasing home values and providing important health and safety benefits. Access to high quality counseling and the development of new product innovations in the area of reverse mortgages could also help many older homeowners living in poverty or at risk of poverty to improve their financial status and pay for needed services such as health care and home improvements. In addition, the benefit of targeted strategies linking counseling, financial education, and potential wealth-building activities with key instances of homeowner decision making such as applying for credit (especially home equity loans) and public benefits (especially property tax abatement, energy assistance, and weatherization), tax filing, and refinancing should not be overlooked. The findings reported in this chart book also highlight the critical role of Social Security and other public programs in preventing poverty among older persons and mitigating the effects of poverty. These findings validate and reinforce the Foundation s goal of enhancing and protecting effective public support programs. However, as emphasized in a recent AARP Public Policy Institute report on changes in the poverty status of women, maximizing earnings potential in retirement and increasing asset accumulation are also essential in reducing the economic vulnerabilities in old age. This report identifies heavy debt burdens as an obstacle to progress in increasing asset accumulation among the poorest older families. The fact that almost 20 percent of families age 50+ living in poverty have debt payments in excess of 40 percent of total income, and that the percentage of families in such circumstances has been increasing, suggests that the recent democratization of credit has a dark side for many of the most financially vulnerable older families. A strategy incorporating financial education and counseling, increased protections against financial abuse, and the development of public/private partnerships to increase access to lower- cost financial services could help many of these families reduce their debt and begin to redirect some of their resources to savings and other asset accumulation activities. The development and implementation of such strategies will be challenging, and complete success cannot always be guaranteed. Nevertheless, it is essential to move forward with such efforts to assure that those currently in poverty or at risk of poverty will have a chance for a more financially secure future. 7

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15 Ana T., Des Plaines, IL I am a single woman of 58 and am running scared. I have worked all my life since the age of 13. I have nothing to show for it. I have always lived from paycheck to paycheck. I am at the point where I have dropped my health insurance and am in great debt. Hopefully a good job will be coming my way soon. What will happen to me if I get sick for a month or two? I will be finished. We need better health care for the baby boomers like me who just struggle from week to week to make ends meet. I have nothing for my old age as I am sure millions more people are in the same boat as I am. Section 1: Demographic Characteristics of Persons Age 50+ 9

16 10 Table 1: Gender and Educational Attainment of Persons Age 50 and Older by Poverty Level Poverty Levels 1 Below 100% 100%-199% 200%+ Gender Male 37.5% 39.0% 48.9% Female 62.5% 61.0% 51.1% Educational Attainment Grade 6 or less 10.5% 8.8% 2.1% Less than High School 27.1% 23.6% 8.6% High School Diploma 32.7% 39.2% 32.5% Some College or Associate Degree 18.2% 18.7% 25.7% Bachelor's Degree 8.3% 6.8% 18.3% Post-Graduate Degree 3.2% 2.9% 13.0% Table 3: Distribution of Demographic Characteristics Across Race and Marital Status Poverty Levels 1 Below 100% 100%-199% 200%+ Race/Ethnicity White 6.5% 16.0% 77.5% African-American 19.0% 24.0% 57.1% Hispanic 16.5% 27.0% 56.6% Marital Status Married 32.9% 44.7% 72.1% Widowed 24.9% 29.5% 9.9% Divorced/Separated 27.8% 18.0% 12.8% Never Married 14.5% 7.8% 5.2% Table 2: Percentage of Persons Age 50 and Older Who Are Living Alone (a), by Poverty Level and Gender Poverty Levels 1 Below 100% 100%-199% 200%+ Living Alone Male 33.3% 25.4% 12.7% Female 48.8% 44.9% 17.8% All Persons 43.0% 37.3% 15.3% Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement. 1 Poverty levels are determined for a family based on the number of people in the family, total income, and age.

17 Table 4: Distribution of Demographic Characteristics Within Age Groups Demographic Characteristics Age 0-49 Age Age Age 75+ All Ages By Age Group Gender Male 50.3% 48.4% 46.0% 39.3% 49.1% Female 49.7% 51.6% 54.0% 60.7% 50.9% Household Income Less than $15, % 8.3% 13.3% 22.1% 9.4% $15,000-$24, % 7.6% 16.0% 23.1% 9.4% $25,000-$49, % 21.2% 33.3% 30.6% 24.4% $50,000-$74, % 19.7% 15.7% 11.0% 19.7% $75, % 43.1% 21.8% 13.3% 37.1% Race White 61.3% 75.2% 78.3% 82.9% 66.1% African-American 13.2% 10.3% 9.4% 7.1% 12.1% Hispanic 18.1% 8.9% 7.6% 5.8% 15.1% Other 7.3% 5.6% 4.8% 4.2% 6.6% Education Grade 6 or Less 30.9% 2.9% 4.9% 6.3% 22.8% Less than High School 13.7% 9.1% 15.8% 21.2% 13.4% High School Diploma 19.4% 31.1% 36.8% 38.1% 23.7% Some College or Associate Degree 19.0% 26.7% 21.1% 17.8% 20.4% Bachelor's Degree 12.2% 18.3% 12.3% 9.8% 13.1% Post-Graduate Degree 4.9% 11.9% 9.2% 6.9% 6.5% Marital Status Married 32.7% 68.8% 65.3% 47.0% 42.1% Widowed 0.4% 4.5% 17.7% 43.2% 4.7% Divorced/Separated 7.0% 18.6% 12.9% 6.3% 9.4% Never Married 59.9% 8.2% 4.1% 3.5% 43.8% Living Arrangements Men Living Alone 48.8% 48.2% 46.6% 40.8% 48.2% Women Living Alone 51.2% 51.8% 53.4% 59.2% 51.8% Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement. 11

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19 Sara C., VA Chronic illness robbed me of the active lifestyle I loved. I lost my teaching position, a 16 year-long successful career in the public school system that I loved. Suddenly, I was a single mother with no source of income. At the age of 40 my savings are depleted, I rely on food stamps for groceries, have declared bankruptcy, and may lose our small home. Worst of all, we lost our insurance. No more doctor visits, eye or dental care, or prescription drugs. My health quickly declined, especially without my medication. While I finally found some drug assistance, it was a long, stressful process due to my illness. The only way we can get health insurance is to pay a monthly premium of $650, not possible without an income. This has to stop, and it needs to stop now! Section 2: Findings from the Current Population Survey Concerning Labor Force Participation, Disability, Retirement Income and Public Benefits 13

20 14 Figure 1: Below Poverty and At-Risk Persons Have Lower Labor Force Participation Rates Continuing to work helps keep older people out of poverty. Higher income levels are associated with higher rates of labor force participation: nearly onequarter of persons age 65+ who have incomes that are at least twice the poverty level are still in the labor force. Labor Force Participation Rate 100% 75% 50% 25% All Below 100% % 200% % Age Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement.

21 Figure 2: Women Age 50 to 64 Have Lower Labor Force Participation Rates Than Men at All Income Levels for Age 50 to % At all income levels, women age 50 to 64 are less likely to be in the workforce than men. Some of the explanation may lie in the fact that women are more likely than men to work as unpaid caregivers. Labor Force Participation Rate 75% 50% 25% % Men Women Men Women Men Women Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 15

22 16 African-Americans and Hispanics are more likely than Whites to be in the labor force at age 65+. Hispanics age 65+ have the highest rate of labor force participation and African- Americans age 65+ have the next highest rate. The lower participation rate for Whites is likely due to the fact that Whites age 65+ are the most likely to have retirement income from pensions and 401(k)s (see Figure 12), and health insurance from private sources or Medicare (see Figure 18). Hispanics are also slightly less likely to have Social Security retirement benefits (see Figure 28). The same pattern is not characteristic of persons age 50 to 64. Labor Force Participation Rate 90% 60% 30% 0% Figure 3: African-Americans and Hispanics Are More Likely Than Whites to Be in the Labor Force at Age White 3.8 African- American Hispanic 6.9 White Hispanic 9.1 White African- American African- American Hispanic Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

23 Figure 4: Unemployment Is a Serious Problem for Persons Below Poverty Age 50 to 64 Unemployment is a significant problem for persons age 50 to 64 in the workforce who live in poverty; it likely contributes to their poverty status. Unemployment is also detrimental to retirement security because the unemployed are unable to increase their savings and assets. Unemployment Rate 25% 20% 15% 10% % % All Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 17

24 18 Figure 5: African-Americans Aged 50 to 64 Below Poverty and in the At-Risk Group Are Much More Likely Than Other Racial Groups to Experience Unemployment Among persons in the workforce age 50 to 64, over one-quarter of African- Americans living in poverty report being unemployed. At the lower income levels, African-Americans are substantially more likely to be unemployed than other racial groups. Unemployment Rate 40% 30% 20% 10% White African-American Hispanic % Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

25 Figure 6: Illness, Disability and Retirement Are Major Reasons for Not Working Among Persons Aged 50 to 64 Almost 60 percent of men with incomes up to twice the poverty level, and over half of women below poverty, have left the workforce because of an illness or disability. Men are more likely than women to leave the workforce because of illness or disability. Retirement rates rise with income level, from one quarter of men and women below poverty to over half of men with income twice the poverty level or more; this is likely because persons at these higher income levels are more likely to have pensions, 401(k)s and other retirement income. Women are many times more likely than men to have left the workforce to care for home or a family member, at all income levels. Percent 100% 75% 50% 25% 0% Male Ill or disabled Retired Taking care of home or family Other Ill or disabled Retired Female Taking care of home or family Other 37.6 Ill or disabled Retired Taking care of home or family 4.1 Other 2.7 Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 19

26 20 Figure 7: Disability Is a Significant Problem for African-Americans and Whites Aged 50 to 64 Below Poverty Nearly one-half of African-Americans below poverty and almost as many Whites below poverty report that a disability affects their ability to work. Persons with income below poverty report significantly higher rates of disability than those with incomes twice the poverty level or more. Of those who report that a disability affects their ability to work, many may still be working reduced hours or at different jobs, potentially reducing their incomes. Percent Reporting That a Disability Affects Their Ability to Work 60% 50% 40% 30% 20% 10% 0% 44.6 White 48.0 African- American Hispanic White 34.8 African- American 18.7 Hispanic White African- American Hispanic Below 100% 100%-199% 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

27 Figure 8: Social Security Disability Insurance Assists a Small Percentage of Those Aged 50 to 64 Who Report a Disability That Affects Their Ability to Work A minority of persons age 50 to 64 who report that a disability has affected their ability to work actually receives Social Security disability insurance (SSDI) payments. The long application and appeals process may present more of a barrier to low-income workers who are unable to afford legal help. Percent Receiving SSDI 15% 12% 9% 6% % 0% Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 21

28 22 Figure 9: Social Security Helps Keep Persons Age 65+ Out of Poverty Without Social Security benefits, and in the absence of offsetting increases in work or savings, the poverty rate for persons age 65+ would increase from 9.4 percent to 44.9 percent. Percent of Persons in Poverty 50% 40% 30% 20% 10% 0% Kept Out of Poverty by Social Security 1 Official Poverty Rate Age Group 1 These figures indicate the percent currently not poor who would be poor without Social Security benefits. Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

29 Figure 10: Social Security Is Important to All Racial and Ethnic Groups With age Social Security assumes increasing importance, regardless of race. Hispanics have the lowest rates of Social Security receipt at all income levels and ages. At age 65+, Whites above the poverty line have the highest rates of receipt. Percent Receiving Social Security 100% 75% 50% 25% 0% White African - American Hispanic Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 23

30 24 At the higher income levels, men age 65+ are more likely than women in the same age group to have pensions, 401(k)s or other non-social Security income. Below poverty, however, the rates for both sexes are about equal, though far lower. Percent with Pension or Other Retirement Income 70% 60% 50% 40% 30% 20% 10% 0% Figure 11: Men Are Generally More Likely Than Women to Have a Pension, 401(k) or Other Retirement Income at Age Men Women Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

31 Figure 12: For Households Aged 65+, Whites Are Most Likely and Hispanics Are Least Likely to Have Pension 401(k) or Other Non-Social Security Retirement Income At all income levels, Whites are the most likely and Hispanics the least likely to have a pension, 401(k), or other non- Social Security source of retirement income. Hispanics are less likely to have worked in jobs covered by pensions and more likely to have immigrated to the United States mid-way through their working life. Percent with Pension or Other Retirement Income 75% 60% 45% 30% 15% 0% White African-American Hispanic Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 25

32 26 At incomes below poverty and at twice the poverty level and above, married women age 65+ are more likely than other women in this age group to have retirement income from pensions or 401(k)s. Divorced women below poverty are the least likely to have income from these sources. Widows generally have lower rates of receipt of retirement income than other women. Have Pension, 401(k) or Other Retirement Income 70% 60% 50% 40% 30% 20% 10% 9.3 Figure 13: Married Women Aged 65+ Living in Poverty Are More Likely Than Other Impoverished Women to Have Pensions, 401(k)s or Other Non-Social Security Retirement Income Married Divorced Never Married Widowed Separated % Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

33 Figure 14: Persons Aged 65+ Who Are Living Alone Are Less Likely to Have Earnings or Retirement Income But More Likely to Receive Social Security Benefits Persons age 65+ who are living alone are generally less likely than persons living with others to have income from earnings or retirement income from pensions or 401(k)s. Persons living alone, in contrast, tend to be more likely to receive income from Social Security than do persons living with others. Percent Persons Living Alone with Selected Benefits 100% 75% 50% 25% 0% Living alone Living with others Earnings Social Security Retirement Living alone Living with others Living alone Living with others Below 100% % 200%+ Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 27

34 28 Figure 15: Health Insurance Coverage Is Limited for Persons Aged 50 to 64 at Lower Incomes Persons with incomes up to twice the poverty line are clearly at greater risk of not having health insurance coverage: only 62.5 percent of persons age 50 to 64 below poverty are covered by Medicaid, employer-sponsored or private health insurance. At age 65+, the availability of Medicare ensures that almost (but not quite) everybody has health coverage (not shown). Percent with Medicaid, Employer-Sponsored, or Private Health Insurance 100.0% 75.0% 50.0% 25.0% 0.0% Other Insurance 89.5 Medicaid Below 100% % 200%+ 2.4 Poverty Level Source: 2007 Current population Survey March Supplement

35 Unemployment poses a clear hazard to health insurance coverage, especially at the lowest income level. Only about half of persons age 50 to 64 with incomes up to twice the poverty line who report they are unemployed but looking for a job have any public, employersponsored, or private health insurance. Coverage rates for the unemployed age 50 to 64 are significantly lower than for all persons age 50 to 64 (shown on page 32). Percent of Unemployed Persons with Public, Employer-Sponsored or Private Health Insurance 90.0% 60.0% 30.0% 0.0% Figure 16: Unemployment Jeopardizes Health Insurance Coverage for Persons Aged 50 to Other Health Insurance Medicaid Below 100% % 200%+ 2.2 Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 29

36 30 Figure 17: Retired Persons Age 50 to 64 Below Poverty and in the At-Risk Group Are Somewhat More Likely to Have Health Insurance Than the General Population Compared to all persons age 50 to 64 (chart shown on page 32), retired persons age 50 to 64 in poverty and in the at-risk group are somewhat more likely to have public, employer-sponsored or private health insurance coverage. Percent of Retired Persons with Public, Employer-Sponsored or Private Health Insurance 100.0% 75.0% 50.0% 25.0% 0.0% Other Health Insurance Medicaid Below 100% % 200%+ 2.2 Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

37 Figure 18: Whites Are Most Likely and Hispanics Are Least Likely to Have Any Type of Health Insurance Coverage Hispanics are the least likely of any ethnic group to have health insurance coverage of any type (Medicaid/Medicare, employersponsored or private). For the group age 50 to 64, about half of Hispanics with incomes up to twice the poverty line have health insurance coverage. Access to Medicare greatly improves health coverage rates for persons age 65+, but coverage rates for Hispanics in this age group are still lower than for other ethnic groups. Percent Having Health Insurance 100% 75% 50% 25% 0% White African- American Hispanic White African- American Hispanic White African- American Hispanic Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement. 31

38 32 Figure 19: Persons Below the Poverty Line Depend on Medicaid Persons below poverty depend heavily on Medicaid for health insurance. Differences by sex are generally minimal except for the fact that women age 50 to 64 below poverty are more heavily dependent on Medicaid than men. Asset tests reduce the number of persons below poverty who qualify for Medicaid. Percent Persons Receiving Medicaid 60% 50% 40% 30% 20% 10% 0% Male Female Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement.

39 Figure 20: African-Americans and Hispanics Rely on Medicaid More than Whites Do African-Americans and Hispanics depend heavily on Medicaid: usage rates for some age and income levels are up to twice that of Whites. There are no significant differences across race by sex (not shown). At age 65+, falling Medicaid rates are probably due to the fact that many people have begun collecting Social Security, Medicare and other retirement income (not shown). Percent Receiving Medicaid 50% 40% 30% 20% 10% 0% White African - American Hispanic Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 33

40 34 Figure 21: Medicaid is Important to Women Below Poverty or At-Risk Regardless of Marital Status Women of every marital status depend on Medicaid. Married women are somewhat less likely than other women of similar ages and incomes to receive Medicaid. Percent Receiving Medicaid 40% 35% 30% 25% 20% 15% 10% 5% 0% Married Widowed Divorced/Separated Never Married Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

41 Persons age 50 to 64 who live in poverty rely heavily on public benefits. Medicaid, Supplemental Security Income (SSI), public housing and food stamps are the forms of benefits most frequently received by persons below the poverty line. Women are more likely than men to receive these benefits. Table 5: Persons Below the Poverty Line Who Are Age 50 to 64 Rely Heavily on Public Benefits Men Women Medicaid 38.8% 46.4% Supplemental Security Income (SSI) 16.3% 22.4% Below 100% Public Housing 10.2% 13.2% Food stamps 25.1% 35.4% Family income assistance 2.4% 4.0% Energy assistance 8.6% 11.8% Rent subsidies 4.4% 5.1% Medicaid 25.8% 28.5% Supplemental Security Income (SSI) 7.6% 11.1% % Public housing 4.5% 5.3% Food stamps 7.5% 10.8% Family income assistance 0.8% 1.9% Energy assistance 3.9% 5.5% Rent subsidies 1.6% 2.7% Medicaid 6.2% 7.3% Supplemental Security Income (SSI) 1.6% 2.2% 200%+ Public housing 0.3% 0.6% Food stamps 0.4% 0.9% Family income assistance.1% 0.4% Energy assistance 0.3% 0.3% Rent subsidies 0.2% 0.2% Source: Census Bureau, 2007 Current Population Survey, March Supplement 35

42 36 Table 6: Persons Below the Poverty Line Who Are Age 65+ Depend on Public Benefits Persons age 65+ who are below the poverty line rely heavily on public benefits, although to a somewhat lesser extent than the group age 50 to 64. This is likely due to the availability of Medicare and Social Security to the older population. It is still generally, although not always, the case that women are more likely than men to receive these public benefits. Men Women Medicaid 31.2% 30.2% Supplemental Security Income (SSI) 11.9% 14.0% Public Housing 9.8% 13.0% Below Food stamps 15.1% 18.5% 100% Family income assistance 0.6% 1.4% Energy assistance 6.3% 8.5% Rent subsidies 4.3% 4.5% Medicaid 17.2% 16.4% Supplemental Security Income (SSI) 5.1% 5.6% Public housing 5.4% 7.8% % Food stamps 4.1% 5.6% Family income assistance 0.3% 0.5% Energy assistance 4.4% 5.0% Rent subsidies 1.9% 2.8% Medicaid 6.6% 8.4% Supplemental Security Income (SSI) 1.5% 2.0% Public housing 0.5% 1.2% 200%+ Food stamps 0.4% 0.8% Family income assistance 0.1% 0.2% Energy assistance 0.5% 0.8% Rent subsidies 0.1% 0.4% Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

43 Figure 22: Persons Age 65+ Are More Likely to Own Their Homes Than Persons Age 50 to 64 Homeownership rises with age and with income. Persons age 65+ are more likely to own their own homes than those age 50 to 64 at all income levels. Percent Owning Homes 100% 75% 50% 25% % Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 37

44 38 Figure 23: African-Americans and Hispanics Are Less Likely to Own Their Homes Than Whites 100.0% White African-American Hispanic Only one-third of poor African-Americans age 50 to 64 below the poverty line own their own homes, the lowest rate of any group. Whites are the most likely to own their own homes; at incomes above poverty, Hispanics are generally the least likely to own their homes. For all races, homeownership rises with income and age. Percent Owning Homes 75.0% 50.0% % 0.0% Below 100% % 200%+ Below 100% % 200% Poverty Level and Age Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

45 Figure 24: Households Below Poverty Rely on Public Housing Assistance Public housing assistance is received by over 10 percent of households below the poverty level. Households with incomes up to twice the poverty level also rely on housing assistance. Percent Receiving Public Assistance 14% 12% 10% 8% 6% 4% 2% 0% Below 100% % 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 39

46 40 Figure 25: African-Americans Age 50+ Are More Likely Than Other Racial or Ethnic Groups to Receive Public Housing Assistance African-Americans age 50+ are more likely than other racial or ethnic groups to receive public housing assistance at all income levels. Percent Receiving Public Housing 25% 20% 15% 10% 5% 0% 9.8 White 20.3 African - American 8.6 Hispanic 5.4 White 10.5 African - American 7.0 Hispanic 0.4 White 1.9 African - American 0.8 Hispanic Below 100% 100%-199% 200%+ Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement

47 Figure 26: Persons Who Are Divorced, Never Married and Widowed Are Significantly More Likely than Married Persons to Receive Public Housing Assistance at Age % Divorced/separated and never married persons are the most likely to receive public housing assistance and married persons the least likely at all income levels. Percent Receiving Public Housing Assistance 20% 15% 10% 5% 0% 5.5 Married 11.6 Widowed 14.9 Divorced/Separated 15.9 Never Married 2.5 Married 6.9 Widowed 8.8 Divorced/Separated 10.1 Never Married Married Widowed Divorced/Separated Never Married Below 100% % 200%+ Marital Status and Poverty Level Source: U.S. Census Bureau, 2007 Current Population Survey, March Supplement 41

48

49 In 2000, Sue was divorced and in 2002 her 12-year old son became terminally ill with leukemia. Not only did she bear the burden of his illness, she bore the burden of the cost of his illness. This left her in debt and without credit. Sue has a 16-year old who lives at home and she is also the primary caregiver for her 2 ½-year old grandchild AARP Foundation Women s Scholarship Recipient Section 3: Findings on Assets, Debt and the Use of Financial Services from the Survey of Consumer Finances 43

50 44 Net worth (total assets minus total debt) is a very important measure of the financial wellbeing of families in the Survey of Consumer Finances. Older families in the below poverty and at-risk groups have extremely low net worth, pointing to a lack of financial security for many middle-aged and older Americans. $400,000 $300,000 $200,000 Figure 27: The Median Net Worth of Families in the Below Poverty and At Risk Groups , , ,500 $100,000 $ 60,500 49,420 21,650 10,000 5,100 23,200 Below 100% % 200%+ Poverty Level Source: 2004 Survey of Consumer Finances; Unit of Analysis: Primary Economic Unit (PEU)

51 Figure 28: Median Net Worth of African-American and Hispanic Families Age 50 to 64 The median net worth of older African- American and older Hispanic families is significantly lower than the net worth of older White families. The disparities are greatest for those in the 50 to 64 age group. This situation is particularly worrisome given the fact that this age group should be building assets for retirement. $300,000 $200, ,000 White African-American Hispanic 277, ,430 $100,000 47,200 42,250 52,501 42,400 49,420 35,600 $ Age Source: 2004 Survey of Consumer Finances; Unit of Analysis: Primary Economic Unit (PEU) 45

52 46 Figure 29: The Median Net Worth of Single Females is Significantly Lower than the Median Net Worth of Single Males or Couples Age 50+ The median net worth of families headed by women age 50+ and living in poverty is only about a tenth of that of similar families headed by men. In the at-risk group, the net worth of these female-headed families is less than half (41 percent) that of male-headed families. Median Net Worth $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 Married living with partner Male head neither married or living with partner Female head neither married or living with partner 385, , ,250 $100,000 $50,000 $ 84,300 59,200 43,600 34,700 23,500 4,260 Below 100% % 200%+ Poverty Level Source: 2004 Survey of Consumer Finances; Unit of Analysis: Primary Economic Unit (PEU)

53 Figure 30: Families Below the Poverty Line Who Own Their Homes Have Built Up Modest Equity Housing is typically the most important asset in a family s portfolio and the equity in a home can be an important source of retirement savings and security. Equity levels for older families in the below poverty and at-risk groups are modest. Equity is therefore a less available source of funds for these families in the event of a financial emergency or family crisis. Median Net Equity $160,000 $120,000 $80,000 $40,000 60, ,000 64,000 50,000 43,500 68, , , ,000 $ Below 100% % 200%+ Poverty Level Source: 2004 Survey of Consumer Finances; Unit of Analysis: Primary Economic Unit (PEU) 47

54 48 Figure 31: The Median Net Housing Equity of Older African-American and Hispanic Homeowner Families is Less Than That of Older White Homeowner Families Lower levels of net housing equity for older African-American and Hispanic homeowner families limit the availability of a potential financial resource to meet financial emergencies or health or personal needs. Median Net Housing Equity $160,000 $120,000 $80,000 $40,000 $- White African-American Hispanic 145, , ,000 75,000 70,000 49,000 54,000 46,000 40,000 Below 100% % 200%+ Poverty Level Source: 2004 Survey of Consumer Finances; Unit of Analysis: Primary Economic Unit (PEU)