According to the Employee Benefit Research Institute (EBRI), the percentage of older Americans living below the poverty line has been growing since 2005, with many falling into poverty status as they age and their savings dwindle. And health care and nursing home costs are two of the biggest culprits.
It may not be a big surprise to learn that with the economy bust of the 2000s came problems for a generation preparing for retirement. Between 2005 and 2009, poverty rates began rising in correlation with the economic recession—the housing crisis, stocks dropping and overall economic downfall all contributed to many seniors falling into poverty during this time. Unfortunately, as you age, medical expenses can add up, not to mention, increased poverty and stress can be a catalyst for suffering health conditions.
In fact, the EBRI study found that 96% of seniors living in poverty experienced some sort of health condition, whether high blood pressure, diabetes, psychological problems or arthritis, compared to only 61% of retirees whose savings placed them above the poverty line. And one of the main problems affecting seniors suffering in these tough economic times? The cost of nursing homes and assisted living:
“Medical expenditures go up for the elderly as they age and medical expenses have been rising over the past decade very rapidly,” says Sudipto Banerjee, a research associate at EBRI and author of the report. “A lot of people have to move to nursing homes, and nursing homes are very expensive. People who live there, they lose their income and assets very quickly.”
Research from the Center on Aging and the Minnesota Area Geriatric Education Center at the University of Minnesota shows that there has been a huge growth in home-and community-based services under Medicaid as these options provide quality care in a more affordable setting. And it is predicted that as the economy improves, the poverty rate will go back down. After all, it’s normal under tough economic times for retirees to spend down their assets too quickly, according to Banerjee. So, hopefully, as the economy improves, so will the golden years for many retirees.
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