Although a half century ago, then-President Lyndon Johnson declared a “war on poverty,” a multitude of seniors still are in the bind of poverty.
According to a new CNNMoney survey, the income of seniors in nearly every state fell short, compared with their younger counterparts.
On average, seniors are getting by with a median household income that’s averaging about 57 percent of the median household income of those age 45 to 64, according to an analysis of the U.S. Census bureau data.
Only seniors in Hawaii and Nevada have median annual incomes that meet the incomes normally recommended by financial planners for retirement. They recommend that you need to have savings or investments enough to replace at least 70 percent of income before retirement.
The Social Security Administration says 53 percent of married couples and 74 percent of single retirees depend on Social Security checks for at least 90 percent of their income. Nearly half of U.S. households receive some sort of government subsidy.
Median household income has fallen for each of the past five years, according to the Census Bureau, even though news media reports talk of a growing economy.
Many seniors and younger Americans have held on to their confidence in the stock market, although very few money managers or investment advisers a year ago thought the S&P 500 would leap forward 31 percent in 2013, the fifth year of the bull market.
The market seems to be driven by the indication that the Federal Reserve Board will hold to low interest rates for a while longer. Political clashes, including the glitch-ridden health care start up hasn’t sent stocks tumbling. Obviously, some young and old have some money in the market.
I’m glad I stayed in the market – diversified stock and several limited partnerships in oil and gas pipelines kept my IRA growing. I’m not giving investment advice, but I’ve been heavily in stocks for more than 50 years. Many seniors, however need every dollar for necessities.
Only seniors in Nevada and Hawaii have annual incomes that meet the savings amounts that financial planners recommend. Seniors in Massachusetts were in the worst shape. They are living on only 45 percent of the income of their pre-retirement counterparts.
Not far behind were North Dakota, Rhode Island, New Jersey and New Hampshire. All had replacement rates of about 50 percent of the median income of their younger counterparts age 45 to 64.
The Sunbelt states of Arizona, Florida and New Mexico came close to the goal of the analysis which divided median household incomes for residents 65 and older by the incomes of those age 45 to 64 to come up with replacement rates for seniors.
Many seniors in the private sector are losing guaranteed monthly pension checks, which have been trimmed or replaced with 401(k) plans. These plans may well be more remunerative than the static, defined benefit plans because their money is invested in the stock market, which has been going gangbusters.
As indicated previously, Social Security checks have been the major income source for many retirees – both married couples and single retirees get most of their income from Social Security. Other Social Security statistics show that an average monthly Social Security check is about $1,230. Seniors receive average yearly payments totaling $14,760 a year.
About 20 million seniors — almost half of the older population — are scraping by on incomes that put them dangerously close to the poverty level. The poverty level for a senior couple is a paltry $15,510.
Tait Trussell is an old guy and fourth-generation professional journalist who writes extensively about aging issues among a myriad of diverse topics.