September 21, 2010

Retirement Poverty Rates are Higher than Expected

How is retirement? Do you enjoy sleeping in every morning? How is your golf game? People think retirement is a state where you have no work and responsibility. This is a misconception. Retirement is a financial struggle for many people!

Most researchers have agreed that the measure of poverty in the United States does not show the economic status of the retired or elderly population. A study using data from the 2004 Health and Retirement Study compared the official poverty rate for adults with alternative measures that portray the true income and needs of older adults. This study also took into account state income taxes. The results of this study showed that retired Americans limited health care causes American citizens to pay for a lot of their health care out of their own pocket. The updated results show that between 0.3 and 1.5 million more adults live in poverty than the original measure.

Although the American government has Social Security and Medicare in place they will not work for long! Already Medicare is paying more benefits than the taxes it is receiving. By 2016 it is estimated that scheduled revenues will no longer be able to fully cover Social Security costs. Social Security equalizes the retirement money given by paying those with low income more money than they invested and wealthier contributors less money than they invested.

Policies that postpone the retirement of the elderly can boost their incomes and make the future health care costs easier for them. Besides this policymakers should look into Medicare and exclude the lowest income adults from cost sharing.

This post is also available in: Spanish

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