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Majority of American Senior Citizens Would be in Poverty Without Social Security

New supplemental poverty report from Census Bureau drops 2.3 million more seniors below poverty level – medical expense the significant factors

By Tucker Sutherland, with materials from U.S. Census Bureau

graphic on supplemental poverty rate report showing many more seniors in poverty than in offical poverty rateOct. 17, 2014 – The last time we got a report on poverty in the U.S., which was just weeks ago, senior citizens seemed to be doing pretty well. Although the “official poverty” report said 4.2 million seniors lived in poverty, the rate was flat with 2013. Now, the Census Bureau has reported a different look, called the “supplemental poverty rate” and a few million more seniors have dropped below the poverty rate.

In the supplemental poverty rate report there are 6.5 million people age 65 and older living in poverty. That’s 2.3 million more than in the official rate released in September. The rates were 14.6% in the supplemental rating and just 9.5% in the official poverty report.

The really scary part is that excluding Social Security would leave the majority of the total senior population (52.6 percent or 23.4 million) in poverty. And some people don’t understand why seniors get so upset about politicians messing with Social Security!

Without adding Social Security benefits to income, the supplemental poverty rate overall would have been 8.6 percentage points higher (or 24.1 percent rather than 15.5 percent).

Medical out-of-pocket expenses were a significant factor in pushing the senior group below poverty in the supplemental.

Even though supplemental poverty rates were lower than the official rates for children and higher for those 65 and older, the rates for children were still higher than the rates for both 18- to 64-year-olds and people 65 and older.

 

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Seniors Hold Their Own Against Poverty in 2013, Household Income Jumps

Rate of poverty in U.S. declines for first time since 2006, household income steady

Sept. 26, 2014 – There are a lot of very poor senior citizens in the U.S. – 4.2 million in poverty says the Census Bureau – but the latest look at poverty by the bureau finds the rate of poverty for seniors did not change in 2013 from the 9.5 percent in 2012.


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The nation’s poverty rate was 15.5 percent in 2013, down from 16.0 percent in 2012, according to the supplemental poverty measure released today by the U.S. Census Bureau. The 2013 rate was higher than the official measure of 14.5 percent, but similarly declined from the corresponding rate in 2012.

Meanwhile, 48.7 million were below the poverty line in 2013 according to the supplemental poverty measure, not statistically different from the number in 2012. In 2013, 45.3 million were poor using the official definition released last month in Income and Poverty in the United States: 2013.

These findings are contained in the Census Bureau report The Supplemental Poverty Measure: 2013, released with support from the Bureau of Labor Statistics and describing research showing different ways of measuring poverty in the United States.

The supplemental poverty measure serves as an additional indicator of economic well-being and provides a deeper understanding of economic conditions and policy effects.

Unlike the official poverty rate, the supplemental poverty measure takes into account the impact of different benefits and necessary expenses on the resources available to families, as well as geographic differences in housing costs.

For example, the measure adds refundable tax credits to cash income, which reduces the supplemental poverty rate for all people by nearly three percentage points (18.4 percent to 15.5 percent). For children, the supplemental poverty rate of 16.4 percent would rise to 22.8 percent if refundable tax credits were excluded.

“The supplemental poverty measure is an important tool that helps policymakers and the public judge the effectiveness of social safety-net programs in a way that the official poverty measure cannot,” said Kathleen Short, a Census Bureau economist and the report’s author. “It also helps us track how necessary expenses, such as paying taxes or work-related and medical-out-of-pocket expenses, affect the economic well-being of all families.”

The supplemental poverty measure deducts various necessary expenses from income; these include medical out-of-pocket expenses, income and payroll taxes, child care expenses and work-related expenses. These expenses reduce income available for purchasing essential basic goods, including food, clothing, shelter and utilities and a small additional amount to allow for other needs. Deducting medical out-of-pocket expenses increases the supplemental poverty rate by 3.6 percentage points.

Without accounting for medical out-of-pocket expenses, the number of people living below the poverty line would have been 37.5 million rather than the 48.7 million people classified as poor with the supplemental poverty measure.

More Background

The supplemental poverty measure is an effort to take into account many of the government programs designed to assist low-income families and individuals that were not included in the current official poverty measure, released Sept. 16.

While the official poverty measure includes only pretax money income, the supplemental measure adds the value of in-kind benefits, such as the Supplemental Nutrition Assistance Program, school lunches, housing assistance and refundable tax credits. Additionally, the supplemental poverty measure deducts necessary expenses for critical goods and services from income. Expenses that are deducted include taxes, child care and commuting expenses, out-of-pocket medical expenses and child support paid to another household.

Today’s report compares 2013 supplemental poverty estimates to 2013 official poverty estimates for numerous demographic groups at the national level. In addition, the report presents supplemental poverty estimates for states using three-year averages. At the national level, the report also compares 2012 supplemental poverty estimates with 2013 estimates.

There has been a continuing debate about the best approach to measure income and poverty in the United States since the publication of the first official U.S. poverty estimates in 1964. In 2009, an interagency group asked the Census Bureau, in cooperation with the Bureau of Labor Statistics, to develop a new, supplemental measure to allow for an improved understanding of the economic well-being of American families and the way that federal policies affect those living in poverty.

The measures presented in this report used the 2014 Current Population Survey Annual Social and Economic Supplement with income information that referred to calendar year 2013 to estimate supplemental poverty measure resources, including the value of various in-kind benefits beyond cash income. (The official poverty measure is based solely on cash income.)

>> Supplemental Poverty Rate Report, pdf

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