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New Economic Indicator Reflects Seniors’ Financial Reality
By
Michael A. Piekarz
Staff Writer
A
new report based on the actual living costs affecting California’s
seniors demonstrates a clear discrepancy between the Federal Poverty
Line (FPL) and the economic reality facing many Californian seniors.
The new Elder Economic Security Standard Index (Elder Index) for California shows
that the FPL, used to determine income eligibility for most public programs,
covers less than half of the basic costs experienced by adults age-65 and older
in the state.
The Elder Index precedes an effort to update the FPL standard on a government
level, and the report was issued by the UCLA Center for Health Policy Research
(CHPR).
The FPL is also used to allocate state and federal resources to local communities
and is an important index. In 2007, the federal poverty guideline for a single,
elderly person over age-65 was an annual income of $10,210. For an older couple,
the FPL is $13,690.
According to the report’s calculations, broken down by each California
county, the basic annual cost-of-living for a retired older adult in good health
and living in rental housing averages $21,011, reaching a high of $27,550 in
San Mateo County. For an older couple, the average is $30,537, reaching a high
of $37,263, again in San Mateo County.
“Knowing the true cost of living for older adults is vital if we are to
ensure that elder Californians can meet basic needs and maintain their independence,” said
Steven P. Wallace, a professor in the UCLA School of Public Health, associate
director of the CHPR and lead author of the report.
“The Elder Index is a new way to assess income adequacy for older adults
that is designed to replace the Federal Poverty Line in policy and practice.”
According to Wallace, the FPL is outdated. Developed four decades ago and using
consumption surveys from the 1950s, the federal measure is based solely on the
cost of the basic food budget needed to meet minimum nutritional requirements.
Not only does the FPL fail to account for the costs of housing and transportation,
noted Wallace, but it does not include medical costs, which can be particularly
debilitating for the elderly.
The more accurate Elder Index provides a calculation of a basic cost-of-living
for retired adults age-65 and older for every California county. The Elder Index
also takes into account the higher cost of living in California, something not
taken into account under FPL guidelines.
Many seniors who have worked their entire lives and are now living on incomes
comprised of Social Security, retirement accounts and pensions are finding that
they are unable to cover the most basic expenses included in the Elder Index.
“The Elder Index for California takes into account the actual costs for
housing, food, transportation, out-of-pocket medical expenses and other necessary
spending,” said Wallace.
“The Elder Index is a fact-based and comprehensive look at the expenses
elders face. It provides an accurate tool for legislators to evaluate existing
and future policy decisions, direct service providers to assess their communities’ needs
and secure necessary funding, advocates to better express their priorities and
individuals to plan for retirement,” explained Susie Smith, director of
the California Elder Economic Security Initiative (Cal-EESI).
In Sacramento and Placer counties, the Elder Index shows that men who retire
with a pension in addition to Social Security and other sources of income are
just getting by. The rest, particularly those with mortgages, are either struggling
or sinking. The particularly vulnerable – those on SSI – are slightly
above the FPL but well below the necessary minimums determined by the Elder Index.
The Elder Index is one of the main tools of Cal-EESI, a statewide, research-driven
initiative at the forefront of a national effort to raise awareness and shape
policy to ensure that older Californians can live with dignity and economic well-being
in their own homes.
It is anticipated that the Elder Index will become widely used in a variety of
venues to assist providers in accurately evaluating senior needs and to ensure
adequate funding thereby increasing the capacity to meet those needs. Advocates
will be able to more effectively bring about policy changes when communicating
with decision makers.
Policymakers will be able to use the Elder Index to more accurately evaluate
policy decisions by measuring which programs and policies are most effective
in helping elders reach economic security and directing limited funds to the
appropriate programs.
The ultimate beneficiaries of the Elder Index will be California’s seniors,
who will be equipped with realistic data on the income needed to make ends meet
in retirement.
Even the boomers not ready to retire will make better-informed decisions about
when and where they retire, how much they need to save and whether they will
need to continue working after they formally retire.
The Elder Index uses widely accepted and credible national and state data sources
such as the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Geographically-relevant data is used for each county in California, reflecting
local market rates for items such as housing, healthcare, transportation and
long-term care.
This page and its contents ©2008
Metropolitan News Company, Inc.
