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Pitting the interests of the elderly and disabled against those of children is politically short-sighted, because advocates of public outlays for children and for the elderly have long been—and should remain—allies against those who believe that the role of government should be limited to providing for defense and public safety, and little else…. progress is based on building and sustaining coalitions. If those who share the view that government should intervene actively to promote social welfare—for children, the disabled and poor, and the elderly—engage in fratricide, each of those groups will suffer.¹

—Henry Aaron, Brookings Institution

With inequality at record highs and economic instability becoming increasingly widespread, it is no surprise that millions of American workers and their families are struggling. It is also apparent that, following decades of stagnant incomes for low- and middle-income workers, record shares of Americans are ill-prepared for retirement, putting future generations of older Americans at an even greater risk.

Yet as anger and frustration about economic inequality and rampant instability continue to mount, all too often the debate is framed in terms of generational warfare—as though older generations are somehow winning and younger generations are somehow losing.

It is indisputable that poverty among older Americans has significantly declined over the past several decades. Between 1966 and 2013, the official poverty rate for seniors—generally considered to be adults ages 65 and older—fell by two-thirds, from 28.5 percent to 9.5 percent. ² Today—decades after the creation of Social Security, Medicare, and Medicaid—children in the United States are now twice as likely to be poor as seniors.³ In 2015, Social Security alone kept more than 1 in 3 seniors—or 15.1 million older Americans—from having incomes below the federal poverty line.⁴ And Medicare remains one of the nation’s largest insurance providers for older Americans, with about 46.3 million seniors–nearly all—covered.⁵

But pitting generations against one another is not the answer. This narrative misses the fact that economic insecurity occurs across generations, with older Americans experiencing far greater levels of hardship than are captured by the outdated federal poverty measure. Moreover, it misses that all generations need to work together, as today’s young will be tomorrow’s old.

Using the Supplemental Poverty Measure, or SPM—a more comprehensive measure of poverty than the official measure that takes into account not just income but also expenses such as out-of-pocket medical costs—1 in 7 seniors, or 13.7 percent, were poor in 2015 and more than 4 in 10 were considered economically vulnerable, with incomes below twice the SPM poverty threshold.⁶ These rates are even higher for elderly women and African American and Latino seniors.⁷

Meanwhile, with financial instability being an increasingly mainstream experience following decades of stagnant incomes for low- and middle-income workers, future generations of older Americans are at an even greater risk.⁸ This is especially the case for women, African Americans, and Latinos, who continue to face entrenched barriers to economic opportunity.⁹ Moreover, rising costs of day-to-day expenses—including transportation, food, shelter, and medical care—have pushed economic security even further out of reach for today’s seniors and younger generations alike, and nearly half of Americans report that they do not have even $400 to cover an emergency expense ¹⁰ As a result, the Center for Retirement Research estimates that a staggering half of all households will not be able to maintain their living standards during retirement.¹¹

With 10,000 Americans turning age 65 each day, rising levels of economic vulnerability among the nation’s seniors not only threaten their well-being but also pose significant challenges for families, communities, and the entire national economy.¹² This report reviews recent data and research on economic insecurity among the elderly and near-elderly; explores why some statistics, particularly the official poverty measure, understate hardship among seniors; looks ahead to future trends in poverty and hardship among older Americans; and offers policy recommendations to ensure dignity and security for all in old age.

It is long past time to put arguments based on generational warfare in the rearview mirror and work together to build an economy that works for Americans at all ages and stages of life.

Today’s struggling seniors

National conversations about the economic status of elderly Americans have largely revolved around the official poverty measure. By this metric, poverty among seniors fell by two-thirds between 1966 and 2013.¹³ But this measure of poverty—and, therefore, the dominant narrative that the nation somehow solved elder poverty more broadly—obscures the reality of hardship among seniors.

The official poverty measure establishes a federal poverty line—a line that is widely considered to be too low to adequately capture hardship and deprivation, and which has significantly declined in relative terms since the early 1960s.¹⁴ Moreover, this measure fails to account for geographical variation, the impacts of critical safety net programs such as tax credits and nutrition assistance, as well as cost increases in expenses that seniors commonly face, such as out-of-pocket medical expenses.

As it currently stands, the too-low federal poverty line obscures the reality that millions of older Americans are unable to make ends meet. While no single measure perfectly captures economic insecurity and hardship among older adults, throughout the remainder of this report, the authors will use 150 percent of the federal poverty line for consistency across time periods and demographics.

Measuring poverty and hardship among older Americans

Alternative measures more accurately depict poverty and hardship among the elderly, particularly two related but distinct types of measurement: income poverty and nonincome poverty.¹⁵

Income poverty measures

Income poverty measures—including the official poverty measure—indicate whether a family has reached a particular income level. While these measures can vary substantially in methodology, income poverty remains a very important part of poverty and hardship, as such measures provide helpful context on long-term income trends and disparities across different demographic populations.

Near poverty

The near-poverty rate has typically been defined as the share of Americans living on the financial brink, with incomes between 100 percent and 150 percent or 200 percent of the federal poverty line.¹⁶ Among people ages 65 and older, the near-poverty rate below 200 percent of the federal poverty line was 31.1 percent in 2015—more than three times the percentage considered officially poor.¹⁷ Among seniors living below 150 percent of the federal poverty line, the near-poverty rate was 19.6 percent. Across all thresholds, poverty and hardship grow with age.

Older communities of color are disproportionately likely to live on the brink of poverty, with nearly half of all older African Americans and Hispanics at or below the 200 percent poverty threshold and about one-third of all African Americans and Hispanics living at or below the 150 percent poverty threshold.¹⁸

Supplemental Poverty Measure

Introduced by the U.S. Census Bureau in 2011, the Supplemental Poverty Measure, or SPM, takes into account certain expenses, in addition to income from earnings, as well as the value of critical programs such as Social Security and housing assistance, among others. Under the SPM, 6.5 million older Americans—or 13.7 percent—were living in poverty in 2015, which is well above the official poverty rate of 8.8 percent.¹⁹ And more than 4 in 10 seniors—42.6 percent—were considered economically vulnerable in 2015, with incomes of less than 200 percent of the SPM.

Organisation for Economic Co-operation and Development’s relative poverty measure

Rather than just looking at absolute poverty rates, the Organisation for Economic Co-operation and Development, or OECD, tracks the relative poverty rates of its member states by looking at the proportion of a nation’s residents who earn less than half the median income of their country of residence.²⁰ Under this measure, the United States ranks fourth highest in elderly poverty among OECD countries, with fully 1 in 5 Americans ages 65 and older falling below this threshold.²¹

Elder Economic Security Index

Wider Opportunities for Women, or WOW, in collaboration with the Gerontology Institute at the University of Massachusetts Boston and a national advisory board comprised of economists, demographers, service providers, and other experts on older adults’ economic security, have developed a measure of income based on what it takes for older Americans to meet their basic needs, including housing, health care, transportation, food, and other miscellaneous essentials.²² While this measure varies according to living situation, housing status, health status, and geography, the income threshold is well above the federal poverty line. For example, under this measure, an elderly couple who rents their home, would need nearly $35,000 annually to cover basic living expenses—more than double the federal poverty line for a family of two.

Nonincome poverty measures

While important, traditional income poverty measures tell only half of the story when examining poverty and hardship among older Americans. Indeed, the story extends beyond household income to include what seniors have in assets and whether their material needs are actually met.

Material hardship

Income poverty measures do not account for differences in need. For example, a person with a disability may need more income to meet their basic needs compared with a person without a disability; but under a traditional income poverty measure, the designated income level may not capture these kinds of differences. Whether an individual’s income is sufficient to meet his or her material needs can often be better illustrated through measurements of material hardship.

New analysis from the University of Massachusetts Boston provides insight into the prevalence of material hardship for the elderly across different income levels:²³

• Shelter hardship. A household was not able to pay rent or mortgage in full; was evicted; was unable to pay utilities; or lost utilities because of nonpayment.
• Housing deficiency. A household had a problem with pests; leaks; broken windows; exposed electrical wires; nonworking plumbing; holes in walls or ceiling; or holes in floor.
• Health care hardship. A household member was unable to see a doctor or dentist when ill.
• Food hardship. A household had to skip meals; ate less than needed or was unable to afford balanced meals; did not eat; or had its food perish.

Unsurprisingly, this analysis shows that, overall, material hardship risks decline as income rises.²⁴ However, as Figure 3 shows, housing and food hardships are particularly widespread among older households with incomes far above the federal poverty line. And health care hardship remains a risk well up the income spectrum.

Asset poverty

Asset-based poverty measures assess a person’s economic vulnerability in the event of an economic shock, such as unemployment, death of a breadwinner, or divorce. Asset-based measures generally examine whether one has enough in savings and liquid assets to live at the federal poverty line for at least three months.²⁵ By virtue of age and longer earnings histories, older Americans are more likely to have accumulated financial assets. However, they are also more likely to spend down financial assets during retirement. As a result, recent longitudinal research by Mark Rank and his colleagues finds that more than half of individuals ages 60 to 84—58 percent—will experience liquid asset poverty.²⁶ Unsurprisingly, Rank finds severe racial disparities—African American seniors are 2.4 times more likely than white seniors to experience a spell of asset poverty.²⁷ Meanwhile, research by the Institute on Assets and Social Policy finds that one-third of seniors have no money left over at the end of the month or are in debt after meeting necessary expenses.²⁸ According to 2013 survey data from the Federal Reserve Board, 61 percent of households headed by an adult age 60 or older had some amount of debt; among those with debt, the median amount of debt was $40,900.²⁹

America’s struggling seniors are more likely to be women

Women are disproportionately likely to face poverty and hardship in old age. In 2015, 22.8 percent of elderly women fell below 150 percent of the federal poverty line, compared with just 15.7 percent of older men. Particularly vulnerable are older women of color, who are more than twice as likely as white men to have incomes under this threshold. Elevated rates of poverty and hardship among elderly women are driven in large part by a lifetime of inequities in income and employment, assets and savings, and health and longevity.

Longstanding occupational differences between men and women—as well as disparities in numbers of work hours, familial responsibilities, and enduring discrimination in the workforce—mean that women typically earn less over their lifetimes than their male counterparts. This fact is even more true for today’s seniors than for members of today’s female workforce, who now earn, on average, 80 cents for every dollar earned by men, up from the 56 to 60 cents on the dollar that women earned in the 1960s and 1970s.³⁰  Many of today’s older women, who are more likely to have worked in poorly-compensated jobs or female-dominated industries that offer less in pay and employer-sponsored benefits than male-dominated industries, have suffered substantial earnings losses as a result, jeopardizing their economic security in old age.

Despite the significant strides that women have made, these issues will continue to plague future generations of older women. Today, women comprise fully two-thirds of the low-wage workforce—that is, jobs that pay $10.50 per hour or less.³¹ And while the amount of time that women spend on unpaid care work has decreased slightly, about 60 percent of America’s 43.5 million adult caregivers are women, with interrupted employment histories further exacerbating the lifetime earnings gap.³² This is particularly the case for Baby Boomers—or those born between 1946 and 1964—are particularly hard hit as the first generation to care for both parents and children simultaneously in great numbers.³³ All told, the typical woman today will suffer an earnings loss of $418,480 over the course of a 40-year career.³⁴ This lifetime earnings gap is even worse for African American women and Latinas, who typically lose $877,480 and $1.7 million in earnings, respectively, over a 40-year career.³⁵

This lifetime of inequities in income and employment translates into sizable disparities in retirement security. The median retirement income in 2015 for women ages 65 and older was $17,400—a full 44 percent less than that of men, who earned $31,200 in retirement income.³⁶ Women who are already retired are less likely than men to have their own pension.³⁷ And while working women have finally reached parity with working men in participation rates in employer-sponsored pension plans, women are still less likely to be eligible to participate in such plans, in part because they are more likely to take on part-time employment or experience shorter periods of job tenure.³⁸

It comes as no surprise, then, that women face higher rates of hardship and economic insecurity in old age. Making matters worse, women outlive their male counterparts by almost five years, on average, putting them at even greater risk of facing economic vulnerability.³⁹ With greater longevity comes an increased likelihood that a woman will outlive her savings and other sources of retirement income. People who live longer are also more likely to experience the death of a spouse, see declines in their health, and develop a significant disability or illness. It is for these reasons that women face elevated rates of poverty in very old age. Indeed, 28.4 percent of women ages 75 and older live below 150 percent of the federal poverty line compared with 18.6 percent of those between ages 65 and 74.

Unsurprisingly, older women rely more heavily on Social Security and public assistance for income than older men. In 2014, more than half of all women ages 65 and older relied on Social Security to cover at least half of their family income, versus just about one-third of men in the same age group.⁴⁰ And 27.4 percent of women ages 65 and above relied on Social Security to cover 90 percent or more of their family income, compared with 21.3 percent of men.⁴¹

America’s struggling seniors are disproportionately African American and Latino

African Americans and Latinos are particularly vulnerable in old age. In 2015, elderly African Americans and Latinos were more than twice as likely as white seniors to live under 150 percent of the federal poverty line, with poverty rates of 34.9 percent and 33.2 percent, respectively, compared with just 16.2 percent of white seniors ages 65 and older.⁴² Older Latinas and African American women also face substantially higher poverty rates than their white female counterparts. Among older Latinas, 35.7 percent live with incomes below 150 percent of the federal poverty line.⁴³ For older African American women, that figure climbs to 37.6 percent. By comparison, 19.2 percent of older white women fell below that same threshold.⁴⁴

African Americans and Latinos tend to face entrenched inequities in wealth, income, and employment, which can translate into economic hardship in old age. In 1983, median family wealth—which includes financial assets, such as bank accounts and 401(k)s, and nonfinancial assets, such as homes and vehicles—for African Americans and Latinos stood at $12,906 and $9,341, respectively. Meanwhile, the median white family had $102,063 in wealth—approximately 10 times the sum held by their African American and Latino counterparts.⁴⁵ This trend has only worsened with time. In 2013, African Americans had $11,030 in wealth and Latinos had $13,730, compared with $134,230 for whites.

Wealth disparities can be explained in part by structural disparities in wages and employment. White workers have long out-earned African American and Latino workers due to sizable racial and ethnic wage disparities, which were even more pronounced when today’s seniors were in their prime working years. In 2015, for example, the typical African American worker took home an average hourly wage of $18.49 c