Aging and Poverty

Abstract

Millions of elders in the United States live below the poverty threshold, a fact that can have severe negative consequences for their quality of life. In particular, women, racial minorities, individuals with lower educational levels, and the very old are at greatest risk for living below the poverty threshold. These groups are also the fastest growing subgroups among the elderly within the United States. There are, however, a number of governmental programs available to help elders in need. These include Social Security, Medicare, and Medicaid. Unfortunately, as the birth rate dwindles and longevity increases, these programs as we know them may be in jeopardy and need to be quickly rethought in order to provide for the projected needs of elders in the foreseeable future.

Overview

The trials of old age increase as one's body passes its peak of fitness and it becomes increasingly hard to not only do the things that one once did in one's youth, but also to perform the activities of daily living that are necessary for health and hygiene. This situation may be further complicated in some cases by declining cognitive abilities and a resulting difficulty in dealing with the important decisions that need to be made regarding one's health and quality of life. This situation can be complicated even further by the fact that the cost of living keeps rising while many elders are forced to live on a fixed income. Responding to this situation is not a mere matter of eating hamburger instead of steak: As one's body continues to age and require more medical care, it does not matter that there are advances in medical science if one cannot afford to pay for them. In addition, numerous observers have noted that poverty actually increases the probability of physical and mental illness among the elderly.

According to the US Department of Health and Human Services, the 2007 poverty guidelines state that for one-person households, the poverty threshold is $10,210 in the continental United States and $13,690 for a two-person household (http://aspe.hhs.gov/poverty/07poverty.shtml). In 2016 the threshold increased to $12,140 for one-person households and $16,460 for a two-person household (http://aspe.hhs.gov/poverty-guidelines). Millions of elders meet the qualifications for poverty while still more are considered to be financially vulnerable. As is shown in Table 1, women, and the very young are at greatest risk for living below the poverty threshold.

Reasons for Elderly Susceptibility to Poverty. What causes so many elders to be forced to live below the poverty threshold? Some people argue that elders who are forced to live below the poverty line were improvident in their younger years, failing to save for retirement. However, this hypothesis does not take into account a number of societal causes for poverty in old age such as restricted opportunities for education and employment, gender bias in the workplace, ageism, or lack of financial security for family caregivers. According to conflict theorists, this situation is caused by the impact of social structure on patterns of aging. For example, less affluent people may have to learn to live within the constraints of a fixed income and depend heavily on Social Security and Medicare; a less than ideal situation if one wants a reasonable quality of life. When this situation is compounded by other economic factors such as inflation and recession, it can be particularly difficult and seniors may find it a struggle just to purchase food, utilities, medication, and the other necessities of life. Further, conflict theorists note that elders are often the victims of age stratification as a result of ageism and the inability to get jobs with the same income level as they could in their youth. This results in a reduction in social status. Conflict theorists are not the only ones to observe and theorize about the deleterious effects of modern society on the age stratification and concomitant standard of living of many older individuals. Modernization theorists observe that many of the jobs in which elders were previously employed have become redundant and obsolete due to automation and technology and that postindustrial jobs tend to be based on new technologies. Such loss of employment can lead to a lowered income. Even if elders do change careers or acquire new skills, they may often experience a reduction in status as they no longer have a long history of experience in their career and are forced to compete with young people who are willing to work for lower wages and who will stay on the job longer. In addition, modernization theorists note that the general migration to urban areas coupled with the contemporary tendency for married people to move out from their parents' homes and start a nuclear family of their own results in increasing residential segregation where one generation is less able to help another generation, thereby compounding the effects of poverty.

According to data from the 2000 to 2012 American Community Survey, poverty increased in the United States from 12.2 percent in 2000 to 15.9 percent in 2012 (Bishaw, 2013). The Great Recession of 2007 to 2009 increased poverty rates to 14.3 percent in 2009 and 15.1 percent in 2010, the highest rate since 1993. The poverty rate remained elevated in 2011 and 2012 at 15.9 percent overall and 9.1 percent for people age sixty-five and older (Bishaw, 2013; Gould, Mishel, & Shierholz, 2013). These poverty rates would have been higher without federal programs such as unemployment insurance, which kept 1.7 million people out of poverty, and Social Security, which kept 15.3 million older Americans from poverty (Gould, Mishel, & Shierholz, 2013). By 2016 the poverty rate had decreased to 14 percent. Research has found that those elders at highest risk for living beneath the poverty threshold are those who have lower levels of education, those who held low-paying jobs that did not have pensions, those who are women or minorities, and those living in nonmetropolitan areas. General events that placed elders at greater risk for poverty included leaving a paid job and (in the case of women) becoming widowed, separated, or divorced.

The Breakdown. McLaughlin and Jensen (1995) performed a longitudinal study of existing data from the annual Panel Study of Income Dynamics to analyze poverty transitions among older adults aged 55 and above in the United States. The study data included information from 5,023 individuals who were within this age group between the years of 1968 and 1987. The data analysis indicated that factors affecting transition into poverty tend to be the similar for both women and men. Having been poor in the past tends to be a predictor of being poor again at some time in the future. However, the longer the period of nonpoverty after being poor, the less likely the individual is to become poor again in the future. Other findings of the study included the fact that blacks are twice as likely to become poor than are other elders. On the other hand, being educated beyond the high school level tends to decrease the probability of one experiencing poverty in later life. However, this finding tended to be more descriptive of the situation for men than it was for women. Being single is a risk factor for poverty for both sexes, but being widowed was found to be a risk factor only for women. Individuals living in situations in which the head of the household either did not work or was decreased, his/her work hours also increased the risk of poverty. In general, the study found that men living in nonmetropolitan areas are at higher risk for becoming poor in a given year than are men living in a metropolitan area. This finding also holds true for women with the exception that those women living in metropolitan areas are at higher risk of poverty than married women living in either metropolitan or nonmetropolitan areas.

Applications

No matter its cause, poverty is a fact of life for many older individuals. For those individuals who have lived in poverty all their lives, old age can actually improve their condition because it makes them eligible for resources and programs that are not available to younger individuals in the same economic situation. For example, under the Older Americans Act, older individuals may be eligible for senior housing, the services of senior centers, and meals (http://www.aoa.gov/AoARoot/AoA%5FPrograms/OAA/index.aspx). Social Security income can also bring these individuals some measure of relief from poverty. However, for other older individuals, this situation is a step down from the income and resources that were available to them earlier in their lives. In general, those living below the poverty threshold tend to have more functional limitations, experience poorer physical and mental health, and have a higher mortality rate than those living above it.

Although the number of elders living below the poverty threshold in the United States has been declining, the fact remains that many are still at risk. Further, although the proportion of elders living below the poverty level has decreased, the inequality between those who live at this level and those who do not is increasing (Richardson & Barusch, 2005). One explanation for this phenomenon is the increasing discrepancies between private pensions and Social Security. Private pension plans tend to duplicate the inequalities of the labor market so that individuals in better jobs not only have higher socioeconomic status while they are working, but also have a pension plan that provides them with higher income—and concomitant socioeconomic status—in retirement. Social Security, on the other hand, is designed so that lower-income individuals see proportionally greater benefits than do higher income individuals. For example, in 2003, Social Security was designed to replace 90 percent of one's earnings below $606 per month, 35 percent of the earnings from $606 to $3,653, and only 15 percent of earnings from $3,653 to $7,250. In 2016, Social Security replaced about 40 percent of an average wage earner's income. Therefore, although income disparities between individuals continue under Social Security, these are smaller than when the individuals were working.

Programs that Aid the Elderly

Supplemental Security Income. One of the best known social programs to help the elderly in the United States is the Social Security Supplemental Security Income program, designed to provide a minimum guaranteed income to the elderly and other classifications of individuals in need. To receive Supplemental Security Income, one must both be in a category covered by the program (e.g., aged) and meet a strict means test. This program is administered as a federal-state partnership with state agencies managing eligibility determination and the Social Security Administration managing federal contributions and regulation of the program. Social Security has significantly lowered the number of elders potentially living in poverty. In 2005, for example, 47.6 percent of the nation's elderly would have been living below the poverty threshold without Social Security income. Women in particular have been helped by this program, in part because women tend to live longer than men and are more likely than men to rely exclusively on Social Security income during retirement (Richardson & Barusch, 2005). In addition, the Social Security Administration oversees the Medicaid program that helps the elderly and others who meet strict means testing requirements by providing healthcare.

Reverse Mortgage. Another program to help homeowners 62 years of age and older is the reverse mortgage (also called a reverse annuity mortgage or home equity conversion mortgage). This FHA HUD program allows older people to borrow against the equity in their homes and receive regular payments from the lender without minimum income or credit requirements. Payments may be made as a lump sum cash settlement, monthly payments for a fixed period of time ("term plan"), monthly payments over the remaining lifetime of the borrower as long as the borrower uses the home as his/her primary residence ("tenure plan"), a line of credit that can be drawn from on an as-needed basis, or a combination of these options. Under any of these options, the borrower is entitled to live in the home for as long as it remains his/her primary residence. The loan does not need to be paid until after the owner dies, leaves the home, or sells the home, at which time the ownership of the house reverts to the lender. Further, the income from a reverse mortgage does not affect the individual's eligibility for other public programs that have means testing if the income is spent within a short period of time.

At first glance, reverse mortgages may look like a program that would be of little help to elders living below the poverty threshold. However, not only is home ownership high among the elderly in the United States in general (78 percent in 2000 versus 66 for the general population), but is also fairly high for the elderly living below the poverty threshold. Eighty-seven percent of the homes of the elderly poor are owned free and clear (Kutty, 1998). According to the Administration on Aging (AoA), 25.1 million older persons headed their households in 2011. Of these, 81 percent owned their homes and 19 percent rented, and 65 percent owned their homes free and clear (2012).

For those elders who plan (and are able) to remain in their home for the rest of their lives, reverse mortgages may be a viable option for increasing their income. However, they are risky for both the lender and the borrower. If the borrower is particularly long-lived, lenders run the risk of the accumulated loan balance becoming greater than the value of the home. This can also be a risk if the home value does not increase at the rate projected by the lender (usually around four percent). Lenders also run the risk of older borrowers not being able to maintain their homes at an acceptable level, so that when the property reverts it does not have the value expected. Borrowers, too, face risks when acquiring a reverse mortgage. For example, they may be forced to sell the house or move to a nursing home sooner than they had anticipated or the inflation may erode the value of the payments that they receive. Further, reverse mortgages are good only for those elderly individuals who want to continue to live in their current home. For those who are willing to move, however, higher income is often obtainable by selling the home and investing in an income-generating asset. Based on her research, Kutty found that many of the elderly households could raise their income above the poverty threshold through a reverse mortgage. However, this program is not without its risks and is not appropriate for every situation.

Conclusion

The number of older Americans living at or below the poverty threshold has increased between 2000 and 2012. Many elders still live below the poverty threshold, a reality that can severely impact their quality of life. There are a number of governmental programs available, however, to help elders in need; in particular, Social Security, Medicare, Medicaid, and reverse mortgages. However, as the birth rate dwindles and longevity increases, these programs as we know them may be in jeopardy and need to be quickly rethought in order to provide for the projected needs of elders in the foreseeable future.

Terms & Concepts

Age Stratification: The hierarchical ranking of groups by age within society. In age stratification, different social roles are ascribed to individuals during different periods in their lives. These roles are not necessarily based on their physical capabilities and constraints at the different periods of life.

Ageism: Discrimination based on age or discrimination against the elderly.

Cognitive Ability: A skill or aptitude related to perception, learning, memory, understanding, awareness, reasoning, judgment, intuition, or language. Cognitive abilities include all forms of knowing (e.g., perceiving, conceiving, remembering, reasoning, judging, imagining, and problem solving) and thinking.

Conflict Perspective: An approach to analyzing social behavior that is based on the assumption that social behavior is best explained and understood in terms of conflict or tension between competing groups.

Medicaid: A medical assistance program for low-income individuals. Although Medicaid is open to individuals of all ages, there are income eligibility requirements.

Medicare: A federal health insurance program for older adults aged 65 and over (as well as for certain disabled persons under the age of 65). Medicare Part A comprises hospital insurance inpatient care in a hospital or skilled nursing facility following a hospital stay. Medicare Part A also covers some home health care and hospice care. Medicare Part B comprises optional medical insurance covering physicians' services, some outpatient care, and many other services and supplies not covered by hospital insurance. Medicare Part B requires the payment of a monthly premium. Medicare Part C (available in some areas) allows participants the choice to receive all their health care services through a specified provider organization. Medicare Part D comprises prescription drug coverage.

Modernization Theory: A sociological perspective of globalization that posits that less developed countries will eventually industrialize in the manner of more developed countries and that the process of modernization will gradually improve the quality of life of its members due to political and economic forces. Modernization is thought to affect virtually all countries that have been affected by technological change.

Older Americans Act (OAA): Federal legislation designed to address the needs of adults aged sixty and older in the United States. The OAA creates a structure of federal, state, and local agencies that oversee service programs for older adults. Services covered under the OAA include congregate and home-delivered meals, senior centers, employment programs, supportive services (e.g., transportation, information and referral, legal assistance), in-home services (e.g., homemaker services, personal care, chore services), and health promotion and disease prevention services (e.g., health screenings, exercise programs).

Quality of Life: The sense of well-being that an individual feels regarding his/her life circumstances and life style; the ability to enjoy one's normal life activities. As opposed to standard of living, quality of life is both intangible and subjective.

Reverse Mortgage: An FHA HUD program that allows older people to borrow against the equity in their homes and receive regular payments from the lender without minimum income or credit requirements. Payments may be made as a lump sum cash settlement, monthly payers for a fixed period of time ("term plan"), monthly payments over the remaining lifetime of the borrower as long as the borrower uses the home as his/her primary residence ("tenure plan"), a line of credit that can be drawn from on an as-needed basis, or a combination of these options.

Risk: The quantifiable probability that a financial investment's actual return will be lower than expected. Higher risks mean both a greater probability of loss and a possibility of greater return on investment.

Society: A distinct group of people who live within the same territory, share a common culture and way of life, and are relatively independent from people outside the group. Society includes systems of social interactions that govern both culture and social organization.

Socioeconomic Status (SES): The position of an individual or group on the two vectors of social and economic status and their combination. Factors contributing to socioeconomic status include (but are not limited to) income, type and prestige of occupation, place of residence, and educational attainment.

Status: A socially established position within a society or other social structure that carries with it a recognized level of prestige.

Bibliography

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Bayaz Ozturk, G., & Macdonald, S. P. (2017). Intertemporal poverty among older Americans. Journal of Poverty, 21(4), 331–351. doi:10.1080/10875549.2016.1186778. Retrieved January 25, 2018 from EBSCO online database Sociology Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=sxi&AN=124895778&site=ehost-live&scope=site

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Gould, E., Mishel, L., & Shierholz, H. (2013). Already more than a lost decade: Income and poverty trends continue to paint a bleak picture. Economic Policy Institute. Retrieved November 8, 2013 from http://www.epi.org/publication/lost-decade-income-poverty-trends-continue/

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Kutty, N. K. (1998). The scope of poverty alleviation among elderly home-owner in the United States through reverse mortgages. Urban Studies, 35, 113-129. Retrieved July 25, 2008, from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=200774&site=ehost-live

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Suggested Reading

Angel, J. L., & Angel, R. J. (2006). Minority group status and healthful aging: Social structure still matters. American Journal of Public Health, 96, 1152-1159. Retrieved July 21, 2008, from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=21502250&site=ehost-live

Bennett, N. G., & Olshansky, S. J. (1996). Forecasting US age structure and the future of Social Security: The impact of adjustments to official mortality schedules. Population and Development Review, 22, 703-727. Retrieved July 25, 2008, from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx? direct=true&db=sih&AN=9708020649&site=ehost-live

Cubanski, J., Casillas, G., & Damico, A. (2015, June). Poverty among seniors: An updated analysis of national and state level poverty rates under the official and supplemental poverty measures. The Henry J. Kaiser Family Foundation. Retrieved January 25, 2018, from http://files.kff.org/attachment/issue-brief-poverty-among-seniors-an-updated-analysis-of-national-and-state-level-poverty-rates-under-the-official-and-supplemental-poverty-measures

Hokenstad, M., Jr., & Roberts, A. (2011). International policy on ageing and older persons: Implications for social work practice. International Social Work, 54, 330-343. Retrieved November 6, 2013 from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=60405903

Judd, R. G., & Moore, B. A. (2011). Aging in poverty: Making the case for comprehensive care management. Journal of Gerontological Social Work, 54, 647-658. Retrieved November 6, 2013 from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=66285772

Kingson, E. R., Calhoun, G., Morse, M., & Brown, M. (2007). Options to liberalize Social Security disabled widow(er)'s benefits. Journal of Aging and Social Policy, 19, 39-60. Retrieved July 21, 2008, from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=24522509&site=ehost-live

LeClere, F. B., & Soobader, M. (2000). The effect of income inequality on the health of selected US demographic groups. American Journal of Public Health, 90, 1892-1897. Retrieved July 25, 2008, from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=3823353&site=ehost-live