Elderly Poverty: An Ongoing Crisis


Retirement money or the lack thereof is the largest contributor to the elderly poverty crisis in our nation. There is tremendous concern as to whether or not households have been able to save enough to avoid poverty in their golden years. Analysts from MIT, and researchers from the National Bureau of Economic Research (NBER), the Employee Benefit Research Institute (EBRI), and the National Institute on Retirement Security (NIRS) have all concurred that older Americans are less prepared to live out retirement than ever before. Some demographics show 1 out of 5 elderly will live in poverty by the time they quit working.

The Growth of Elderly Poverty 

According to Sudipto Banerjee of the EBRI, poverty rates across all age groups were falling from 2001 to 2005. There was a sense of hopefulness for a brighter future, but as the recession of 2007-2009 hit, the poverty rate began to rise sharply. By 2009 the poverty rate had doubled, with an added detrimental statistic of 70% of those living below the poverty line experiencing a major health condition. The overall rise in health care costs, increased cost of living, greater health concerns, and lower retirement contributions all correspond to the growth of poverty for older Americans.

…heads of households with dependents that make up the highest cost to insure.

What is now known as the Great Recession also brought with it less opportunity for employment, which impacted all socio-economic groups, but the middle class was hit the hardest. Adding to that is a misconception that elderly people cost more to insure. It is actually heads of households with dependents that make up the highest cost to insure. It could be surmised that this misconception contributed to the growth in unemployment for those aged 65 and older during that time. As a result of all these factors, the rate of seniors aged 75 to 84 entering poverty for the first time doubled in 2009, and things haven’t seemed to improve much since then.

Retirement’s Contribution to the Poverty Crisis 

The elderly population in the United States suffered a tremendous blow during the hardest part of the 2007-2009 financial recession. Many households experienced tremendous setback; however, despite an estimated $11 trillion in restored IRAs and 401(k)s, the National Institute on Retirement Security isn’t so sure financial security in the form of retirement funds has improved despite many saying the recession is over. In fact, their most recent report from March of last year shows that the American household is worse off in 2013 than just before the 2007 financial crisis and that two-thirds of all working families fall short of the conservative target for retirement savings.

The Association of Health and Wealth 

According to the NBER, there is a strong correlation between wealth and health. Their study found that people who had substantially high assets lived longer. Yet that portion of the population was the minority. A large portion of people die with less than $10,000 in income and absolutely no amount of assets to their name, including housing wealth. Could it be that only those in the top minority can afford the necessary procedures and treatments to stay healthy enough to live longer? The comparison study also showed that most of the individuals who passed away in poverty later on were not living in poverty during their 50s and 60s.

…more senior citizens are facing poverty than ever before.

America has found itself in a unique position economically. The elderly poverty crisis is not showing signs of slowing down. The ability for a large portion of Americans to adequately contribute to private retirement funds is thwarted by a remaining rate of high inflation and extremely low rates of return. While attempting to boost the housing market, suppressed interest rates by the Federal Reserve are hurting the retirement sector. With failing Social Security, the predominant source of income for a majority of retirees, more senior citizens are facing poverty than ever before. It would appear that for the majority of Americans, the solution to this crisis is at the mercy of the federal government and the Federal Reserve, but in the meantime, experts recommend contributing as much as possible to private retirement funds and making a concerted effort to live a healthier lifestyle.



Banerjee, Sudipto. (April 2012). Time Trends in Poverty for Older Americans Between 2001-2009. Employee Benefit Research Institute, Notes 33(4). Available at https://www.ebri.org/pdf/notespdf/EBRI_Notes_04_Apr-12.CDHP-EldPovty.pdf. Last Visited March 20, 2016.

Poterba, James M., Venti, Steven F., Wise, David A. (2012). Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and Ahead Cohorts. National Bureau of Economic Research. Available at http://www.nber.org/papers/w17824.pdf. Last Visited March 20, 2016.

Rhee, Nari, and Boivie, Ilana. (Narch 2015). The Continuing Retirement Savings Crisis. National Institute on Retirement Security. Available at http://www.nirsonline.org/storage/nirs/documents/RSC%202015/final_rsc_2015.pdf. Last Visited March 20, 2016.