The senior poverty rate, according to the official measure, is lower than the rate for the U.S. population as a whole and considerably lower than the child poverty rate. It still translates into about 4.2 million people 65 and older whose incomes fell below the applicable poverty threshold last year — just $11,354 for those who live alone.
The more accurate Supplemental Poverty Measure boosts the senior poverty rate to 14.6% — about 2.3 million more people. But for Social Security benefits, the rate would have been a whopping 52.6%. This is why Social Security is justifiably called the most effective anti-poverty program we have.
Yet we do still have some 6.5 million seniors without enough income to live on. And our poverty prevention measures tend to focus on younger people, as Kevin Prindiville, the Executive Director of Justice in Aging, says.
We’ve got a battery of programs to support education and work-related training, for example. And we’ve got a spectrum of programs to prevent — or at the very least, reduce — poverty among those who find work, especially those with dependent family members. In other words, it’s not just younger people our measures focus on, but working families.
All too late, Prindiville observes, for someone in her 70s or 80s who’s struggling now after a lifetime of low-wage jobs. “We cannot just hold up our hands and say we should have helped … [seniors] 50 years ago, or helped their parents a century ago.”
So what would help them now? Prindiville proposes a five-step plan. He’s managed to get them into a single, compact post. I, as usual, want to flesh out the issues and solutions.
So I’ll deal here with the first two, overlapping steps and leave the remaining three for a followup.
Strengthen the Existing Safety Net and Social Insurance Programs*
Social Security, SSI (Supplemental Security Income), Medicare and Medicaid largely account for the 26% drop in the official senior poverty rate since 1960, Prindiville says. First and foremost, we need to protect them.
None of those proposed Social Security benefits cuts, increased Medicare cost-sharing, e.g., through a voucher plan, or tighter limits on Medicaid coverage, which we could expect to see under the Congressional Republicans’ upcoming block grant proposals.
It would change the benefits formula, providing an average of $65 a month more, and base annual adjustments on an as-yet-to-be-completed Consumer Price Index specifically for the elderly. And unlike the 2013 bill, it would ensure that formerly low-wage workers receive benefits at least big enough to lift them over the poverty line, provided they’d worked at least 10 years.
Of course, like its predecessor, the current bill would also keep the Social Security Trust Fund from coming up short on the money needed to pay full benefits past its projected insolvency in 2033.
Rather than simply scrapping the cap on payroll taxes, as some have proposed, it would trigger taxes on all income — not only wage income — over $250,000.
Improve Supplemental Security Income
Let’s just say proposals to boost Social Security retirement benefits won’t go anywhere in this Congress. So we’ll still have seniors in poverty.
We would anyway because not all seniors used to work — or have spouses that did. And even a work history often won’t yield a benefit anyone can live on unless it spans at least 35 years — this because of the way the Social Security Administration calculates benefits.
For the poorest 2.1 million seniors, SSI provides a safety net. But it’s in need of strengthening too. The maximum benefit — currently $733 a month — is nearly $250 less than would be needed to lift a single person over the poverty line.
No benefits at all for individuals whose savings and other “countable resources” are worth more than $2,000. Nor for couples who’ve more than $3,000. So seniors who’ve saved even a modest amount don’t qualify, though they surely need some stash they can draw on for expenses like Medicare deductibles and co-pays.
And as I’ve written before, the formula for SSI benefits adjusts them downward, based on other income beneficiaries receive. The adjustments kick in only if income exceeds a certain amount, however.
We see a preference for income earned from work — understandable, since it encourages SSI recipients to enter (or reenter) the workforce. For other income, the exclusion — or disregard, as Prindiville calls it — is a mere $20 a month, plus the value of a few other public benefits.
The benefits reduction for other income is dollar-for-dollar — twice as much as for wage income. This isn’t a problem for seniors only. But it’s a big problem for them because they’ll lose as much as they gain from even a piddling increase in Social Security retirement benefits.
Congress hasn’t updated the exclusions since it created the program in 1972. If they’d been adjusted to reflect consumer price increases, the unearned income exclusion would be roughly $112 today.
Bills that died in the last Congress would have addressed these problems, as well as what can be large benefits reductions when a friend of relative helps out with food, housing costs and/or utility bills.
Prindiville says he expects the bills to be introduced again this spring. Nothing thus far, but they probably will be — whether to be better fate remains to be seen. Not holding my breath, folks.
* Prindiville’s top-line recommendation implies that Social Security retirement benefits and Medicare are safety net programs like SSI and Medicaid, but they’re insurance programs because workers pay premiums of a sort, as payroll taxes. I’ve modified the recommendation accordingly because I, among others, feel it’s important to preserve the distinction.