By Shannon Benton, Executive Director
How We Can Help The Oldest Retirees?
As more people live to very old ages, they face financial risks for which many people may be unprepared. Poverty rates increase with age, from 7.9% for new retirees, to 12.1% for those age 85 and older. High out-of-pocket medical costs, a decline in the cognitive ability to handle finances, and the loss of a spouse or aging alone, are three common risks for retirees 85 and older. At the same time, income from savings (if there is any) may be less reliable.
Many Members of Congress and policy experts agree that improving Social Security benefits would help retirees in this age group avoid falling into poverty. A proposal that has been widely considered would introduce a targeted benefit boost at age 85.
Policy experts have suggested several ways to target benefits to those 85 and over. Here are two of them:
- Increase benefits by 5% for all retirees age 85 and over in 2019. This means if you are 86 and your monthly benefit, for example, is currently $1,200, you would get a boost of $60.00 a month. If your benefit were higher, say, $1,800, you would get a boost of $90.00 a month.
- The second way is to increase benefits by the same dollar amount for everybody age 85 and up. For example, the increase in 2019 would be 5% of the average monthly retiree benefit in 2018 — about $1,400. That would boost monthly benefits everyone age 85 and up by $70 ($840) for the year.
TSCL strongly agrees retirees age 85 and up are in particular need of such a benefit boost. Ongoing studies by TSCL have found that people retired for more than 18 years have lost 34% of the buying power of their Social Security benefits since 2000. In particular, our research indicates that $70 per month would be a very modest remedy, considering that an average Social Security benefit in 2000 of $816 per month only increased to $1,193 by 2018. Our study found that, to keep up with rising costs, the average benefit would need to have increased to $1,602 just to maintain the same level of buying power as 2000. A $70 per month boost would be a strong first step in the right direction to strengthening retirement security for the oldest Americans. The cost of such a boost could be paid for by lifting the taxable maximum wage cap and applying the Social Security payroll tax to more, or even all, earnings.
Source: “Modernizing Social Security: Helping the Oldest Old,” Alicia H. Munnell and Andrew D. Eschtruth, Center for Retirement Research at Boston College, October 2018.