Advocacy, Research, Training

Retirement


Defining Elder Economic Security Income (Elder Index)

The Elder Economic Security StandardTM Index (Elder Index) is a unique, geography-based definition of income adequacy which demonstrates the amount of income required to meet basic needs without public or private assistance for elders age 65 and older who live independently. The Elder Index allows for specific life circumstances, including housing and health status. The Elder Index was developed by Wider Opportunities for Women (WOW) and the Gerontology Institute at the University of Massachusetts Boston (GI-UMASS), and serves as the cornerstone for the Elder Economic Security InitiativeTM coalition, advocacy and education activities.


Long-Term Care

Long-term care (LTC) allows frail older people and people with disabilities to attain and maintain optimal function. Long-term services and supports include home care, adult day care, residential services, such as assisted living, and nursing homes. Purchase of such services can drastically affect elders’ economic security. Nationally, private pay nursing home costs in 2012 averaged 252% of median senior household income and the cost of home health services averaged 88% of median income. WOW’s own research at the state level has revealed stunningly high costs; for example, in the state of WA, LTC can add between $9,265 and $50,868 to annual income needs, depending on where one lives and the level of care needed.

States have made progress in providing greater access to home and community based services (HCBS) for people with low incomes through Medicaid home and community-based waiver programs. Under waiver programs, states can serve a limited geographic area, define the range of benefits, and tailor services to specific groups. To be eligible for waiver services, individuals must be at risk of nursing home placement; however, eligible individuals are not entitled to receive waiver services and may be placed on a waiting list. The aging of the population, especially those 85-plus, is expected to result in a tripling of LTC expenditures by 2040. WOW works to educate seniors, advocates, service providers and legislators on the impact of the cost of long-term care for seniors, the impact of HCBS in allowing them to remain at home, and the strain insufficient LTC programs and services will place on future state and federal budgets and the health care system as a whole.


Medicare & Medical Expenses

WOW’s Elder Economic Security StandardTM Index (Elder Index) demonstrates that out-of-pocket medical costs are usually the second largest cost for seniors after housing. On average, monthly costs are $402 for single elders and $804 for elder couples in good health. This upends the myth that once on Medicare, a senior no longer faces significant medical costs. It is clear that changes to the current Medicare and Medicaid systems can benefit seniors. The Affordable Care Act, for example, is expected to reduce Medicare spending by $716 billion from 2013 to 2020 and to slow beneficiary cost growth.

Not all prospective changes to the system will ultimately benefit seniors, however. Legislation which would replace the current system with smaller block grants to states would effectually privatize Medicare, giving recipients a fixed subsidy with which to purchase private insurance. These changes would shift substantial costs to Medicare beneficiaries and leave many older adults without any health coverage at all. WOW works in Washington, DC to educate audiences on the large impact health care costs have on elder finances, elders’ ability to age in their own homes, the returns on investment for long-term care programs and desirable changes in federal health care systems.


Older Workers

Over the past four decades, labor force participation rates have risen for men and women age 55 and older. As Baby Boomers reach traditional retirement age, they remain in the labor force at higher rates than previous generations have. While some want to work, others must work due to declines in home equity or savings caused by market instability or to earn enough to pay for continued increases in medical costs. At the same time, the unemployment rate for older workers increased greatly during the Great Recession and remains higher than the unemployment rate among other adult workers. Barriers to employment include inadequate opportunities for workforce skills development, age discrimination and lack of flexible work options. WOW works to preserve local public workforce investment systems and strengthen them for older workers who delay retirement or re-enter the workforce to make ends meet. WOW also advocates in support of the Senior Community Service Employment Program (SCSEP), a community service and work-based training program for low-income persons age 55+, and the only federal job training program targeted to older Americans.


Pensions and 401(k)s

Many current and soon-to-be retirees face an insecure future. A major factor contributing to this insecurity has been the ongoing shift in employer-provided retirement plans from traditional defined benefit pensions to defined contribution retirement plans such as 401(k)s. Whereas defined benefit pensions pay a specific amount of money upon retirement, 401(k) plans allow for saving in a tax-deferred account; accounts are not guaranteed to have any particular value at retirement and may have gained or lost value depending on investment performance. Many older workers (age 55 and over) have neither type of retirement plan. To curb this trend and strengthen future seniors’ economic stability, WOW advocates authorization of universal, automatic 401(k) retirement plans with an employee opt-out, requiring an employer match and automatic roll-over when a job ends. In addition, WOW supports improvement in the 2001 Saver’s Credit—an income tax credit available to eligible taxpayers who contribute to a retirement plan or IRA—by making it refundable to those with no tax liability, by providing a dollar for dollar match of the first $500 saved, and by raising income eligibility limits.


Retirement Income

Retirement security has often been presented as a “three-legged stool” consisting of Social Security, employer retirement plans and private savings. However, Social Security has long been the only source of retirement income for one-in-four workers and spouses. For millions of seniors currently retired or approaching retirement, employment-based retirement plans are not providing the security they anticipated. Pension plans are often underfunded and they have increasingly been replaced by defined contribution plans in which employees bear all costs and risks. Analyses based on WOW’s Elder Economic Security StandardTM Index (Elder Index) show that more than 50% of elder individuals and couples lack basic economic security—and the picture is worse for those approaching retirement. Especially in this context, proposals to trim Social Security benefits and reduce public supports such as Supplemental Security Income or Medicaid threaten both current and future retirees with poverty. WOW advocates for strengthening social insurance benefits and support programs that enable seniors to remain in their communities and lead dignified, engaged lives.


Senior Services and Public Assistance Programs

More than 48 million individuals live below the federal poverty line, including more than 4 million aged 65 and older. Yet, this figure is based on an inadequate and outdated baseline measure of economic hardship, and masks the reality of financial insecurity for millions more older adults. Further, among impoverished elders, some fare much worse than others. Older women are 60% more likely than men to be poor. Among older women of color, close to 15% of Asians, 22% of Hispanics and 21% of African Americans live below the poverty line.

To help reduce the gap between elders’ incomes and economic security, state and federal supports are crucial. Most of these programs–Low Income Home Energy Assistance Program (LIHEAP), Medicaid, housing assistance, the Supplemental Nutrition Assistance Program (SNAP) and other nutrition programs, Supplemental Security Income (SSI) and the Senior Community Service Employment Program (SCSEP)–serve people with low incomes, usually less than 200% of the federal poverty line. Federal spending for low-income programs outside health care is dropping as a proportion of Gross Domestic Product, and is projected to continue to do so. State funding for low-income programs also faces ongoing budget pressures. Through the Elder Economic Security InitiativeTM, WOW and its partners are working to expand access to critical public supports for low-income older adults, and to build economic security for today’s retirees and future generations.

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