Three out of four senior citizen households are financially unprepared for an unexpected illness or other traumatic life event, according to a new report on senior economic insecurity.
Produced jointly by the Institute on Assets and Social Policy in Massachusetts and liberal think tank Dēmos, the report examined the Senior Financial Stability Index, which was also developed by the Institute and Dēmos, and found that seniors lack the resources and time to plan for a “fulfilling” retirement.
The Senior Financial Stability Index examines five factors impacting economic security: retirement assets, household budget, healthcare expenses, home equity and housing costs.
“By this measure, a household is deemed to be secure if it meets the security threshold for the asset factor plus two of the four additional factors,” the report read. “Conversely, a household is insecure when it is insecure in the asset factor, as well as two other factors.”
Economic insecurity among senior households rose from 27 percent in 2004 to 36 percent in 2008—an increase that was in progress before the recession, according to the report.
Researchers also found an additional 40 percent of senior households to be deemed “financially vulnerable,” meaning they are neither secure nor insecure according to the Senior Financial Security Index.
Researchers proposed strengthening Social Security for low-income earners and supporting the Community Living Assistance Services and Supports (CLASS) Act—a voluntary long-term care insurance program contained in healthcare reform—to aid seniors.
Full report: “From Bad to Worse: Senior Economic Insecurity on the Rise” (PDF format)