Today’s 65-year-old can expect to live another 20 years, according to the Social Security Administration.
80% of households with older adults—or 47 million—are financially struggling today or are at risk of falling into economic insecurity as they age.
Optimizing Social Security, accessing benefits, improving long-term care, and using home equity are four ways retirees can maximize their savings.
Today’s 65-year-old can expect to live another 20 years, according to the Social Security Administration. This unprecedented gift of longevity brings with it exciting opportunities—and a price tag. Unlike their parents and grandparents, today’s pre-retirees and retirees face a vastly different retirement security landscape. The traditional three pillars of retirement income are changing.
NCOA worked with the LeadingAge LTSS Center @ UMass Boston to examine both the challenge and potential solutions.
U.S. Wealth Gap Widening: 47 Million Older American Households Facing Financial Risks
Our 2023 updated analysis revealed that most older Americans continue to lack the resources that would allow them to weather a "financial shock" such as a significant long-term care need, health issue, or loss of income due to divorce or widowhood. The analysis of 2018 data previously found that 80%—or 47 million households with older adults—are financially struggling today or are at risk of falling into economic insecurity as they age.
The updated analysis found that despite older adults' preference to age in place, 60% would be unable to afford two years of in-home long-term services and supports. And 45% of people 60 and older had household incomes below the Elder Index1 value for their geography. In other words, their average income was below what they needed to afford basic living needs.
The True Scope of Financial Insecurity in Retirement
To better understand the financial landscape of older Americans, researchers at NCOA and the LeadingAge LTSS Center @UMass Boston analyzed the latest data from the Health and Retirement Study, a longitudinal panel study that surveys a representative sample of approximately 20,000 people in America, supported by the National Institute on Aging and Social Security Administration.2
The analysis discovered that 80% of households with older adults—or 47 million—are financially struggling today or are at risk of falling into economic insecurity as they age. Moreover, this trend is worsening over time, as 90% of older households experienced decreases in income and net value of wealth between 2014 and 2016.
Four Ways to Help Retirees Make Their Money Last
Combined together, longer lives and lower savings are fueling a retirement security crisis for millions of Americans. It is exacerbated by inflation, rising health care costs, and the fact that someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their lifetime.3 Long-term care is expensive and not covered by Medicare.
This white paper by NCOA, LeadingAge LTSS Center @UMass Boston, and Nationwide offers four ways to help retirees make their money last in retirement.
1. UMass Boston. Elder Index. Measuring the income older adults need to live independently. Found on the internet at https://elderindex.org/
2. University of Michigan institute for Social Research. Health and Retirement Study. Found on the internet at https://hrs.isr.umich.edu/
3. U.S. Administration for Community Living. How Much Care Will You Need? Found on the internet at https://acl.gov/ltc/basic-needs/how-much-care-will-you-need