More than 3,600 older Americans shared their financial and other regrets with Business Insider. Many said they regret having turned to government programs designed to help them escape poverty. This is part of an ongoing series about the regrets of older Americans.
America’s population is aging, and that change is putting a strain on federal programs meant to keep older adults out of poverty.
Since mid-September, more than 3,600 seniors have shared their life regrets with Business Insider through reader surveys and direct mail. Many spoke of their struggles navigating programs such as Social Security, the Supplemental Nutrition Assistance Program, and Medicare. This is part of a series on Americans’ retirement regrets.
The overwhelming message was that these programs are not enough to pay the bills. Retirees said they were unaware of this and regret not saving more to supplement their government checks.
BI followed up with several retirees and asked experts about the program’s performance and needed improvements. The solutions described here focus primarily on the public sector, as most retirees rely on programs run by the federal government. Some may have ideas for private or philanthropic solutions.
Indeed, many American retirees are doing well. Baby boomers have benefited from rising home values and stock market values over their lifetimes, and OECD data suggests that the U.S. retirement system is faring better in some areas than other developed countries. There is. According to Census data, about 11% of Americans 65 and older will live in poverty in 2023, down from about 25% in 1976.
Still, many people are struggling, and pressures are likely to increase as the population ages and funding dwindles. Some argue that these trends increase the need to maintain or strengthen government programs aimed at reducing poverty among older people.
We look forward to hearing from you. Are you an older American with a life regret you would be happy to share with a reporter? Fill out this quick form.
Americans are becoming more reliant on government checks like Social Security, and funding for programs is decreasing.
Pamela Shields, 67, receives $1,470 a month in Social Security benefits and an additional $600 from her work as a caregiver and night shift worker at a local grocery store. She has had a long career in customer service and human resources, but has faced unexpected medical bills, two divorces, and is still providing financial support to her children.
She said she worries she won’t have enough to rely on Social Security alone to retire.
Like all beneficiaries, the amount of Shields’ Social Security check is based on her earnings during her working years. But major spending categories like housing, health care and some utilities have outpaced inflation in recent decades.
“I really want to retire and not have to do this for a living,” Shields said. “But I can’t see myself doing that.”
Research by the Economic Innovation Group, a nonpartisan public policy firm, shows that American households like Wood’s are becoming increasingly reliant on government aid such as Social Security. According to EIG research, Americans will receive an average of $11,500 in government benefits in 2022, representing 18% of the population’s total personal income.
But Social Security could be in trouble, with payments expected to start shrinking by the mid-2030s. That burden is expected to increase as more baby boomers reach peak retirement age. Without solutions, they could be the last generation to benefit most.
“Social Security has been a very expensive program for a very long time, and it’s only getting more expensive, especially as the proportion of the population aged 65 and older continues to rise,” said EIG economist Benjamin Glasner. said.
One solution to extending the life of the program is to start reducing benefits now. The U.S. Government Accountability Office said in a report this summer that applying across-the-board cuts to all Social Security recipients or cutting some spouse and widow benefits could increase longevity.
Of course, that would make those already struggling even worse. Ultimately, the United States needs more young workers to contribute to the Social Security fund through taxes, Glassner said. He argued that with the U.S. birth rate reaching historic lows this year, the U.S. should invest more in helping people start and maintain families.
“We won’t be able to tax or cut our way out of this budget mess,” he said. He also proposed consolidating various federal benefit programs, including Social Security, to ease administrative burdens and reduce costs.
Another option is to tighten the program’s funding sources, such as payroll taxes, bond interest, and taxes on benefits. Some Democrats, led by Sens. Bernie Sanders and Elizabeth Warren, have proposed raising payroll taxes on high earners to offset the cost of raising benefits for everyone.
Gopi Shah Ghoda, director of the Retirement Security Project at the center-left think tank Brookings Institution, said the United States is doing something other countries are doing, such as using general tax revenue and focusing spending on low-income groups, like Australia. He said he may consider how to approach the retirement system. Retirees like Canada.
Because Social Security is one of the federal government’s largest expenditures, some lawmakers are looking for cost-cutting strategies. House Republicans are proposing raising the age at which Americans qualify for benefits. President-elect Donald Trump has proposed cutting Social Security income taxes on retirees, which could provide some immediate relief but would reduce overall tax revenue and therefore reduce funding for future programs. It could become even more dangerous.
Andrew Biggs, a senior fellow at the right-wing American Enterprise Institute, has proposed capping monthly benefits at $2,050 starting in 2033, an amount that would push more older Americans into poverty. He argued that it would be possible to maintain higher benefits than the rest of the world for a long period of time without exceeding the line. There will also be cuts to the board if funding dries up. While this may mean smaller checks for high-income earners, he argued that Social Security is often inefficient for middle- and upper-income Americans. That’s because the safety net prevents them from working longer and saving more, he argued.
“The taxes that are levied to pay for these benefits tend to cause people to reduce their labor supply,” Biggs said. “If you were to receive an extra $500 a month from Social Security, it would reduce your retirement savings.”
One way to increase workers’ savings and extend the longevity of Social Security is to increase access to employer-matched 401(k)s at work. In a December fact sheet, AARP cited an estimate that 56 million Americans, the majority of whom earn less than $50,000, do not have access to a retirement savings plan through their employer.
A handful of BI survey respondents said they wish their jobs offered 401(k) matching or financial guidance in retirement.
Still, when accounting for inflation, the average Social Security benefit for retirees is more than 40% higher than it was in the 1970s. Since the 1970s, participation in and contributions to retirement plans have increased. People may also claim Social Security benefits a little later in life.
Researchers said that delaying enrollment in Social Security could significantly improve people’s retirement security if they had other sources of income.
Some Medicare and private insurance plans have increased premiums for seniors or do not cover some needs
Older Americans told BI that medical emergencies, long-term treatment needs, or expensive prescriptions have eroded their savings. Your out-of-pocket costs will add up whether you have private insurance or government insurance. For people on a tight budget, paying for medical bills and other necessities can be difficult, especially if a medical condition prevents you from working.
Rhonda Nichols, 60, was working as a paralegal until her career ended in 2008 when she slipped on the ice. Her emergency savings weren’t enough to cover the surgery, which cost her hundreds of thousands of dollars, including aftercare. Nichols, whose Medicare premiums are paid by the state of Idaho, survives on about $1,100 a month on disability and $300 from her late husband’s pension, much of which goes toward prescriptions and over-the-counter painkillers.
“This injury really affected me financially, because every month I feel like if I don’t get Social Security, I’m screwed,” Nichols said.
Approximately 68 million people are enrolled in Medicare. Medicare is divided into traditional Medicare and private insurance overseen by Medicare, such as Medicare Advantage plans.
Dr. Joel Sharowitz, a geriatrics expert who formerly taught at Northwestern University, said that if private insurance and Medicare Advantage health plans were prohibited from significantly raising premium rates for older beneficiaries, older people would He said it would save money on health insurance premiums. Affordable Care Act Marketplace.
Additionally, if all Medicare plans offered health savings accounts, seniors could potentially build an emergency fund for medical expenses and out-of-pocket expenses, he said.
Goda said many older Americans don’t know that some Medicare plans don’t include long-term care, hearing aids or dental care. “It is impossible in a sense to know all possible outcomes, such as what kind of illness you may contract and how the associated costs will be covered by health insurance,” says Goda. he says.
She suggested the system could be improved by streamlining access to benefits and subsidized services for people who need long-term care. Goda added that an aging population does not necessarily correspond to increased dependency. He cited research showing that early childhood Medicaid eligibility for young people with disabilities is associated with increased employment and lower transfer program costs decades later, and said the U.S. is investing in people’s health throughout their lives. argued that it should be done.
David Henderson, a fellow at the right-wing Hoover Institution, wrote in a 2023 article that if Medicare cuts were to go through, Americans would have to turn the program into a per-person benefit where each person receives a set amount of money to spend as they live. He said he might find it valuable. Depending on their physical condition, especially those who are sick will be given double quota.
“If you spend $900 billion on 65 million people, you get $13,800 per person,” Henderson wrote. “The vast majority of people would value this $13,800 much more than what Medicare would spend on their health care.”
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Outdated poverty line leaves some older Americans unable to receive aid
The poverty line is set at $15,060 per year for a single person and has been calculated in much the same way since the 1960s, when housing was cheap and groceries were a large part of household budgets. Many government assistance programs, such as SNAP and Medicaid, base their eligibility criteria on this standard.
Older Americans told BI that these programs don’t always provide enough help to pay their bills. Mary and Steve Dacus, who are in their late 60s and live in Robinson, Illinois, receive $23 a month in SNAP benefits and $2,140 in Social Security income. Mary previously told BI that her husband and wife are food insecure and that the limited SNAP allotment is “pathetic.”
Americans 65 and older accounted for the largest increase in asset-limited, income-restricted, and employed households classified as ALICE. These Americans are still working and earn enough to qualify them for most government benefits, but not enough to cover all their bills. Stephanie Hoopes, national director of United For ALICE, said eliminating complex paperwork and verification steps could streamline applications for aid programs.
He said raising the federal poverty threshold and expanding eligibility for government assistance programs could also help more people access necessities. Of course, expanding the safety net would have to be paid for through tax increases and changes to state and federal budgets.
Hoopes added that benefits can be adjusted based on how inflation affects housing, child care, food, transportation, medical and technology costs, which would allow “participants to It will allow us to maintain the cost of our needs,” he added.
Still, changing the poverty line would likely mean that government assistance programs like SNAP would require more money to operate, increasing the number of Americans considered to be in poverty. This would be a politically unpopular move.
Are you an older American with a life regret you would be happy to share with a reporter? Fill out this quick form.
