- The majority of Americans retire with less than $10,000 in savings
- Social Security is the principal source of income for the majority of Americans
- There are various government support schemes available for low-income senior citizens
How Many Senior Citizens are in Financial Debt?
In a 2016 study carried out by the Employee Benefit Research Institute, nearly half of the households held by those over the age of 75 reported having debt. That is a 60% increase from the previous decade. Additionally, one-third of Americans over 55 years old have less than $10,000 in retirement savings and 64% of Americans are expected to retire with less than $10,000 in savings.With an ever-worsening financial crisis, there are increasingly more senior citizens in financial debt.
Social security, whilst unable to supplement your retirement income entirely, can help to cover some living costs. In theory, social security should cover one-third of your living expenses. And yet, social security is the major source of income for the majority of senior citizens. It is reported that 90% of individuals over the age of 65 receive Social Security benefits. Among the elderly, around 20% of married couples and nearly half of unmarried persons are dependent on Social Security for 90% or more of their overall income.
Data from the Bureau of Labor Statistics suggests that the average retiree over 65 spends around $46,000 annually, whereas the average Social Security retirement benefit (according to 2019 data) was $17,532 annually. Those over the age of 65 who have disabilities and limited resources are eligible to receive Supplemental Security Income which bolsters the amount from Social Security.
Financial Planning for Senior Citizens
Expert financial advisors suggest that a realistic goal is living on 70% of your annual salary pre-retirement, although of course this is dependent on an individual’s lifestyle and expenses. Budgeting can be key in order to manage finances. As a rough guide, the Bureau of Labor Statistics Annual Expenditure Report indicates that housing should be the biggest proportion of spending (32.4%) followed by Transportation, Food and Healthcare (17.1%, 12.9% and 12.2% respectively). However, for those over the age of 75, more will be spent on healthcare than transportation.
Government Programs Designed for the Elderly
At all levels (local, state and federal), there is government funding available which can help those over 75 supplement their income. State and federal governmental support will depend on where you are located. There are specific programs such as the Supplementary Accommodation Benefit which provide support to eligible seniors who have a low income and are living in designated care residencies. For those senior citizens who were formerly in the military, there are a range of benefits that they may be eligible for. These include monetary support specifically for housing and healthcare.
Nationwide Government Support Programs
Financial experts predict that the main expenses for those over the age of 75 years old are food, housing and healthcare. As such, nationwide funding programs reflect these needs. Programs such as the Housing and Urban Development assists low-income seniors who are struggling to meet their mortgage payments. Similarly, the USDA helps with housing repair loans and grants at a low-level fixed income rate. The Low Income Home Energy Assistance Program (LIHEAP) helps low-income seniors manage the cost of their home energy bills.
As previously stated, for many of those over 75, healthcare becomes more of a priority and in fact, seven million elderly Americans have problems paying their medical bills. The government aims to assist with these costs as much as possible. For example, iCanConnect assists those with hearing and vision loss helping them to fund braille, specific equipment such as tablets as well as specialist training. Medicaid offers an all-inclusive health care program covering prescription drugs, home carers and medical care. Similarly, Medicare offers funding for prescription drugs of up to $4,900 annually.