The Most Vulnerable

Despite the recent 3-year fall in longevity for Americans, there are more 65+ year-olds than ever before, and it is expected that the population over 65 will be greater than those under 18 by 2035 (78.0 million versus 76.7 million), which will mark the first time in the history of the United States that this phenomenon has occurred.

As most of us have come to appreciate, predicting longevity and planning a financial future to meet those needs is not an easy math problem for most. According to the chart below (thanks Kim Blanton, Squared Away Blog), those greater than 85-years-old are most vulnerable financially with more than 12% falling into poverty.  However, as Kim points out in her recent blog post, the level to define poverty is so low ($11,757 for a single person) that many others are likely struggling, too.

age and poverty chart

As a result of the rise in poverty later in one’s life, some are calling for enhanced Social Security payments to be made once a recipient turns 85. The idea is to provide a flat $ increase, as opposed to a percentage increase, that would help the most vulnerable among us.

One of the reasons cited for the need to provide an enhanced payment is the growing medical expenditures later in one’s life, and the inability to work at that age to overcome the increased expenditure. Unfortunately, this situation falls on women to a greater extent as they have longer life spans and lower career wages impacting Social Security payouts.

One suggestion on how to pay for this enhanced benefit was to provide a lower COLA to those earlier in their retirement years, but the COLA doesn’t truly measure the inflation incurred by Seniors, so reducing this annual increase would negatively hurt many older Americans.

Perhaps there is a way to utilize a form of longevity insurance to provide this enhanced benefit for those Americans reaching 85-years-old.  For those Americans capable of deferring Social Security benefits until age-70, a portion of what they would have received might go to a longevity insurance contract that will provide an income stream later in life.

It is truly a double-edged sword for many. On one hand, so many are fortunate to be living longer lives, but the golden years are tarnished for those struggling to meet basic needs because of the lack of financial resources. Glad to see that this situation is getting the attention that it deserves.

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