Elder Index Measures the True Cost of Retirement

Q. My husband and I plan to retire in the next 5-10 years. We’ve been saving, but we’re not sure we have enough to retire comfortably. Is there any one place to look at all of the costs of retirement to figure out how much we will really need to retire in the DC Metro area, as well as possibly in other parts of the country? Thanks for your help!

A. The U.S. population is aging so rapidly that in a few years, older Americans will outnumber children for the first time in history, according to census projections. But with rising living costs, many entering their retirement years are wondering how they will ever be able to retire comfortably and how much they will need to do so.

Two Reports Measure Costs of Living and Economic Security in the U.S.

Researchers tracking the economic security of America’s seniors have found that 50% of those who live alone and nearly 25% of those living in two-person households will be unable to afford basic necessities without extra assistance. Information similar to this, the costs of retirement, and the elder “insecurity rate” in all 50 states can be found in the newly released 2019 Elder Index and it’s companion report, Insecurity in the States 2019.

What is Included in the Elder Index?

The Elder Index is a measure that looks at how much income is needed for seniors to maintain independence and meet their daily living costs, while staying in their own homes. It is based on the bare-bones budgets of singles and couples aged 65 and over.

To compile the data, a team at the University of Massachusetts Boston, led by Jan Mutchler, director of the Gerontology Institute’s Center for Social and Demographic Research on Aging, established a benchmark against which to measure the financial security of Americans aged 65 and over. Household income is based on a 2013-2017 5-year American Community Survey, with income values converted to 2019 dollars using the June 2019 Consumer Price Index.

The index estimates the cost to adults age 65 and older for food, housing, healthcare, and transportation in every county in the U.S. Researchers then match income data with index results to determine state and national rates of elder economic insecurity.

Key Findings from Research Tracking Economic Security of Seniors

Researchers tracking the economic security of America’s older adults have found that:

Average Income Needed by Seniors in the U.S.: For 2019, the average income needed by an older individual in rental housing to meet all basic needs was $25,416, and for a couple in rental housing it was $36,204. The index breaks this figure down state by state and by county and city.

Percent of Seniors that Have Incomes Below National Average: National averages suggest 50% of older adults living alone and 23% of elder couples have annual incomes below the Elder Index.

Single Seniors and Couples Near Poverty Level: Nationwide, 32% of single elders and 18% of couples fall into the gap between the Federal Poverty Level and the income required for realistic economic security.

Seniors at Risk: At least 40% of elder adults in every state are at-risk of being unable to afford basic needs and age in their own homes.

Seniors with Social Security as Majority of Income: More than half of older adults living below the Elder Index rely on Social Security for at least 90% of their incomes.

States with lowest economic insecurity: Overall, the state with the lowest Elder Economic Insecurity Rate was Nevada, followed by Alaska and Utah.

States with the highest economic insecurity: The state with the highest Elder Economic Insecurity Rate was Vermont, followed by New York and Massachusetts.

“Making ends meet is a daily challenge for many older adults, especially those who live alone,” said Mutchler. “The Elder Index provides an important reality check – a realistic measure of the actual cost of a no-frills lifestyle for elders living independently.”

The Elder Index is a free online resource available at Anyone can use the database to find out how much is needed to be economically secure, by location and family type; compare expenses across locations and family types; download national, state, county and city index data; and access additional information on elder economic security.

Housing and Healthcare are the Biggest Major Living Costs Faced by Seniors

When it comes to major living costs facing seniors, reserchers found that housing and health care topped the list. According to Mutchler, “(m)edical bills in particular can be very expensive, especially as people move into their 70s and 80s and encounter chronic conditions that require ongoing treatment and medications.”

For couples, health care is especially costly — there is no family plan for Medicare, meaning couples pay twice the individual rate. Social Security plays a critical role in meeting these costs. Many older people also draw on retirement accounts, savings, or other assets to pay the bills or continue to work into later life, at least on a part-time basis. But even so, a significant number of older Americans are forced to make ends meet by holding back on the health care they need, going into debt, or using other strategies that do not support health and well-being.

Measures to Better Support Seniors

The Elder Index offers the following suggestions about measures to better support seniors:

• As the senior population grows, the federal government and each state must learn to recognize the security gap and those who fall into it.

• The federal government must also consider whether or not policies contribute to the economic security of older adults living above the poverty line, as they require services and supports beyond emergency aid that contribute to intermediate- and long-term stability goals.

• Economic security, rather than avoiding poverty, is the goal to which seniors and those who represent and serve them should aspire.

• Protecting Social Security benefits is essential for all older adults.

• Subsidies and benefits targeting low-income seniors can really help. But these programs need to be widened, as typically the only people eligible are at or very near poverty levels, rather than being economically insecure.

• Communities, too, need to better promote economic security through affordable senior housing and making sure older residents receive the benefits available to them.

Finally, according to the report, we really need more conversations about what the true cost of retirement living is and how people can plan for that. At present, people are not adequately informed. As a result, too many people enter retirement without financial security.

Are You Within a Decade of Retirement? Start Planning Now!

Whether your retirement is coming up soon or many years away, it is important to protect your hard work and your golden years with effective retirement planning and long-term care financial planning.

Besides being a Certified Elder Law Attorney, I am also an experienced retirement planning advisor and long-term care financial advisor through my financial services company, Lifecare Financial Services, LLC, which has been in business since 2006.

Retirement planners, such as myself, generally work with people ages 55 and older, who are within 10-15 years or so of their desired retirement age. Learn more about our retirement planning services here.

Plan in Advance for Retirement and Long-Term Care

We here at the Farr Law Firm have strategies in place to help all types of people at all ages to plan for retirement, incapacity, and long-term care. By planning in advance, each person can retain the assets it has taken a lifetime to accumulate and the peace of mind that their family’s needs will be adequately and properly addressed. Please contact us to make an appointment for an initial consultation:

Retirement Planning Fairfax: 703-691-1888
Retirement Planning Fredericksburg: 540-479-1435
Retirement Planning Rockville: 301-519-8041
Retirement Planning DC: 202-587-2797

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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