How Many Seniors Live in Poverty?

Introduction

The Census Bureau’s official poverty measure was created in the early 1960s and is used to provide official statistics of the share of Americans living in poverty. To calculate the share of people in poverty, the Census Bureau compares pre-tax monetary income (such as income from a job and Social Security benefits) to the official poverty threshold. Under the official measure, the poverty thresholds are set at three times the subsistence food budget from 1963, adjusted annually for inflation, and vary based on the size of a family and the age of its members, with lower thresholds for families with members age 65 or older. In 2017, the poverty threshold was $12,752 for an individual under age 65, and $11,756 for an individual age 65 or older, and the official poverty rate for older adults was 9.2%.

In response to concerns that the official poverty measure is outdated and does not accurately reflect people’s financial resources or liabilities, the Census Bureau has developed an alternative measure of poverty, known as the Supplemental Poverty Measure (SPM). The SPM differs from the official measure in several ways, thereby producing different estimates of poverty (see Appendix for details). Two primary differences are how poverty thresholds are measured and how financial resources are measured:

• Measuring poverty thresholds. The SPM bases poverty thresholds on patterns of expenditures on basic necessities that are more recent than 1963, and adjusts thresholds to reflect homeownership status and regional differences in housing prices. The SPM thresholds vary by household size, but not by age. For example, under the SPM, the poverty threshold in 2017 was about $10,400 for a single homeowner without a mortgage living in Charlotte, North Carolina (about $1,400 less than the official poverty threshold for an individual age 65 or older), and about $18,400 for a single adult with a mortgage in San Jose, California (about $6,600 more than the official poverty threshold for an older adult).
• Measuring resources. In addition to monetary income, the SPM incorporates certain information about a household’s financial resources and liabilities. Resources include the monetary value of tax credits and in-kind government benefits received for food, clothing, shelter, and utilities (e.g., food stamps). Liabilities include job-related expenses, taxes paid, and out-of-pocket expenses on health care, including premiums.

The deduction of out-of-pocket medical expenses from income is especially important for people ages 65 and older, who spend a larger share of their household budgets on health care costs than younger households do. Below we present our estimates of the share of older adults living below poverty and below 200% of poverty, comparing the SPM and official poverty measure, both nationally and at the state level. We present estimates for poverty among older adults overall and by age, gender, race/ethnicity, and self-reported health status. National estimates are based on 2017 data; subgroup and state-level estimates are based on the average across three years of data (2015, 2016, and 2017).

Findings

National Estimates of Poverty among People Ages 65 and Older

The poverty rate among people ages 65 and older is higher under the SPM than the official poverty measure at the national level, based on data from 2017. The difference in poverty rates among older adults between the two measures is largely due to the fact that the SPM deducts out-of-pocket medical expenses from income, while the official measure does not.

• 100% of poverty: Under the official poverty measure, 4.7 million people ages 65 and older (9.2%) have incomes below the official poverty threshold of $11,756, but this number increases to 7.2 million (14.1%)—2.5 million more—based on the SPM poverty thresholds (Figure 2).

The difference between the two poverty measures is smaller among nonelderly adults (11.2% vs. 13.2% for those ages 18 to 64), and the rate of poverty among children under age 18 is actually higher based on the official measure than based on the SPM (17.5% vs. 15.6%), in part due to the inclusion of refundable tax credits and food stamps under the SPM—although the poverty rate is higher among children than older adults under both poverty measures.

• 200% of poverty: More than 15 million people ages 65 and older (30.1%) have incomes below 200% of the official poverty threshold ($23,512 in 2017), but this number increases to 21.4 million (42.0%)—6.0 million more—under 200% of the SPM poverty thresholds

Poverty among People Ages 65 and Older, by Age, Gender, Race/Ethnicity, and Health Status

Under both the official measure and the SPM, the poverty rate among people ages 65 and older increases with age and is higher for women, blacks and Hispanics, and people in relatively poor health, based on three-year 2015-2017 averages (Tables 1 and 2). The rate of poverty and the number of people living in poverty is higher for all demographic subgroups under the SPM than under the official poverty measure.

Age

Among people ages 65 and older, the rate of poverty rises with age, based on both the official poverty measure and the SPM. Of note, more than half of the 11.5 million adults ages 80 and older, or 6.1 million, have incomes below twice the poverty measure, based on the SPM, compared to around one-third of those ages 65 to 69.

• 100% of poverty: The official poverty rate—those with incomes below $11,756 in 2017—rises from 8.2% among those ages 65 to 69 to 11.4% among people ages 80 and older. A similar pattern is seen for poverty rates based on the SPM poverty thresholds, but the poverty rates are higher, rising from 12.2% among those ages 65 to 69 to 18.3% among people ages 80 and older.
• In absolute numbers, 1.3 million people ages 80 and older live in poverty based on the official poverty measure, but this number rises to 2.1 million (0.8 million more) based on the SPM.
• 200% of poverty: Under the official poverty measure, the share of older adults with incomes below 200% of poverty ($23,512 in 2017) increases with age, from 24.9% of those ages 65 to 65 to 40.0% of those ages 85 and older (Figure 3). Based on the SPM poverty thresholds, these shares increase to 35.8% and 52.6%, respectively.

• In absolute numbers, 4.6 million people ages 80 and older have incomes below 200% of poverty under the official measure, but this number increases to 6.1 million under the SPM (1.5 million more).

Gender

The number and share of older adults living in poverty is higher among older women than among older men under both the official and supplemental poverty measure, and increases with age among both men and women. Of note, close to half of women ages 65 and older have incomes below 200% of poverty based on the SPM—12.6 million out of 27.2 million older women—and this share increases to more than half among women ages 80 and older.

• 100% of poverty: Based on the official poverty measure, 10.5% of women ages 65 and older have incomes below 100% of poverty ($11,756 in 2017), which is higher than the poverty rate of 7.4% among older men. Based on the SPM thresholds, poverty rates are higher for both groups, with 15.6% of older women living in poverty compared to 12.2% of older men.
  • In absolute numbers, 2.8 million older women live in poverty under the official measure, as compared to 1.6 million older men. Under the SPM, the numbers rise to 4.2 million and 2.7 million, respectively.
  • Among people ages 80 and older, the difference in poverty rates between women and men is larger under both the official poverty measure and SPM. For example, under the SPM, 20.4% of women ages 80 and older live in poverty, compared to 15.1% of men (Table 1).
• 200% of poverty: Under the official poverty measure, 34.4% of older women have incomes below 200% of poverty ($23,512 in 2017), compared to 25.8% of older men (Figure 4). These rates are higher under the SPM thresholds, increasing to 46.5% for older women and 37.4% for older men.

• In absolute numbers, 9.4 million older women have incomes below 200% of poverty under the official measure, which is substantially more than the 5.7 million older men who have incomes at this level. Under the SPM, these numbers increase to 12.6 million older women and 8.3 million older men with incomes below 200% of poverty.

Race/Ethnicity

The poverty rate is substantially higher among black and Hispanic adults ages 65 and older than among older white adults, based on both the official measure and the SPM, and particularly high for older black and Hispanic women compared to older white women. Of note, more than 60% of older black and Hispanic women have incomes below 200% of poverty compared to 41.4% of older white women, based on the SPM.

• 100% of poverty: Under the official poverty measure, the poverty rate is more than twice as large among older Hispanic and black adults than among older white adults (17.3%, 18.7%, and 6.9%, respectively). The difference in poverty rates between older Hispanic and black adults and older white adults grows larger under the SPM, with 25.5% of older Hispanic adults and 23.5% of older black adults living in poverty, compared to 11.4% of older white adults.
  • Because the total number of older black and Hispanic adults is much lower than the number of older white adults, the absolute number of older black and Hispanic adults living in poverty is smaller than the number of older white adults living in poverty under both measures, even though the rates are higher among the first two groups. For example, under the official poverty measure, 0.8 million older black adults and 0.7 million older Hispanic adults live in poverty, compared to 2.6 million older white adults.
  • There are some notable gender differences in the rate of poverty among older adults in different racial/ethnic groups (Table 1). Under the official poverty measure, around 20% of older black and Hispanic women live in poverty, compared to 16.2% of older black men and 14.1% of older Hispanic men. Under the SPM, the poverty rate is higher for older black women than older black men (25.2% vs. 21.1%), but similar for both older Hispanic women and men (26.1% vs. 24.7%).
  • Among older women alone, the poverty rate among older black and Hispanic women is more than double the rate among older white women; this is the case under both the official poverty measure and the SPM. Among older men alone, the rate of poverty among older black and Hispanic men is roughly two to three times that of older white men.
• 200% of poverty: Under the official poverty measure, close to half of older black and Hispanic adults have incomes below 200% of poverty ($23,512 in 2017), compared to just over one quarter of older white adults (Figure 5). Based on the SPM poverty thresholds, these shares increase, with 60.3% of older black adults and 65.5% of older Hispanic adults having incomes below 200% of poverty, compared to 37.2% of white older adults.

• In absolute numbers, the higher poverty rates under the SPM translate to 2.6 million older black adults, 2.7 million older Hispanic adults, and 14.1 million older white adults with incomes below 200% of poverty.
• Among older women alone, the share of black and Hispanic women living below 200% of poverty is substantially higher than the share of white women under both the official poverty measure and the SPM. Under the official measure, 50.2% of older black women and 48.7% of older Hispanic women have incomes below 200% of poverty, compared to 30.7% of older white women. Based on the SPM, these shares increase to 64.1%, 67.4%, and 41.4%, respectively.

Health Status

Among older adults, the poverty rate increases as health status worsens, whether based on the official poverty measure or the SPM. Of note, more than half of older adults in fair/poor health—7.7 million out of 13.5 million—have incomes below twice the poverty level, based on the SPM, compared to three in 10 older adults in excellent/very good health.

• 100% of poverty: Based on the official poverty measure, 5.7% of older adults in excellent or very good health had incomes below 100% of poverty ($11,756 in 2017), rising to 14.6% among older adults in relatively poor health. The pattern is the same under the SPM poverty thresholds, but the poverty rates increase to 9.6% and 20.6%, respectively.
  • In absolute numbers, under the official poverty measure, 2.0 million older adults in fair or poor health live in poverty, but this number rises to 2.8 million based on the SPM.

• 200% of poverty: Under the official poverty measure, 20.7% of older adults in excellent or very good health have incomes below 200% of poverty ($23,512 in 2017), a rate that increases to 43.9% among older adults in fair or poor health (Figure 6). Based on the SPM poverty thresholds, the share of older adults living below 200% of poverty increases from 30.9% of those in excellent or very good health to 56.9% of those in fair or poor health.

• In absolute numbers, 5.9 million older adults in fair or poor health have incomes below 200% of poverty under the official poverty measure, but this number rises to 7.7 million—1.8 million more—based on the SPM.

Poverty Among People Ages 65 and Older, By State

The share of people ages 65 and older with incomes below poverty and below 200% of poverty is higher in most states under the SPM than under the official measure, and especially high in some states, based on three-year 2015-2017 averages. The difference in poverty rates under the official measure compared to the SPM may vary geographically for several reasons, including state income distributions; differences in housing prices, which are factored into the SPM poverty thresholds; variations in medical use and costs, since such costs are deducted from income under the SPM but not the official measure; and differences in the generosity of state Medicaid programs, which affects out-of-pocket medical expenses.

• 100% of poverty: In the majority of states (39), less than 10% of all people ages 65 and older have incomes below 100% of poverty ($11,756 in 2017), based on the official poverty measure. In contrast, based on the SPM poverty thresholds, at least 10% of older adults live in poverty in the majority of states (41, plus D.C.) (Table 3).
  • The poverty rate for older adults is above 15% in Washington, D.C. and Louisiana based on the official poverty measure, whereas, based on the SPM, at least 15% of older adults live in poverty in D.C. and 9 states (California, Florida, Hawaii, Louisiana, Maryland, New Jersey, New Mexico, Texas, and Virginia). Under the SPM, nearly 3 in 10 older adults in D.C. and one in five older adults in California live in poverty.
  • The poverty rate among older adults is roughly twice as large under the SPM than under the official measure in 10 states: California, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, Oregon, Utah, and Virginia.

• 200% of poverty: In most states (37), less than 33% of older adults have incomes below 200% of poverty ($23,512 in 2017), based on the official poverty measure. In contrast, based on the SPM poverty thresholds, at least 33% of older adults have incomes below 200% of poverty in every state except Iowa and Connecticut (see map; Table 4).
  • Under the official poverty measure, only one state has more than 45% of people ages 65 and older living below 200% of poverty (Mississippi at 45.6%). But under the SPM, at least 45% or more of older adults live below 200% of poverty in 11 states (Arkansas, California, Florida, Georgia, Hawaii, Kentucky, Louisiana, Massachusetts, Mississippi, New Jersey, and New York) and D.C.

Discussion

This analysis shows a substantially higher number and share of older adults living in poverty under the Supplemental Poverty Measure than under the official poverty measure, primarily because this alternative measure takes into account financial liabilities—in particular, medical expenses, which are higher for older adults. Based on the official poverty threshold of $11,756 for people ages 65 and older in 2017, the number of older adults with incomes below 100% of poverty was 4.7 million, but this number rises to 7.2 million based on the SPM poverty thresholds, which vary by geographic area and homeownership status. In percentage terms, the poverty rate increases from 9.2% to 14.1% among older adults when using the SPM to measure poverty. Under both measures, the poverty rate among adults ages 65 and older is higher among women, black and Hispanic adults, and people in relatively poor health. At the state level, the share of older adults living below poverty is larger in many states under the SPM than under the official measure, and roughly twice as large in some states.

In light of the differences between the official measure of poverty and the SPM, there is ongoing interest in assessing these methods for measuring poverty and the implications of each measure for public programs designed to serve low-income populations. Our analysis provides context for evaluating the implications of proposals that would affect the financial resources of people ages 65 and older, including policies that affect Social Security and other sources of income, and policies that affect seniors’ out-of-pocket health care spending. Higher premiums and cost-sharing requirements under Medicare could lead to higher a poverty rate among people ages 65 and older as measured by the SPM, though the official poverty rate would be unaffected by these changes. This is because the SPM deducts out-of-pocket medical expenses from income. Although Medicaid covers Medicare cost-sharing requirements for some low-income people on Medicare, many low-income beneficiaries do not receive Medicaid coverage. Proposed reductions in Social Security benefits, such as imposing a slower rate of growth on benefits, could also lead to higher poverty rates among adults ages 65 and older under both the official measure and the SPM over time. Yet regardless of how such changes would affect estimates of poverty among older adults, our analysis of current estimates of poverty based on the SPM suggests that a substantially larger number and share of older adults are already struggling financially than is conveyed by the official poverty measure.