A new study released in December by the Gerontology Institute, the John W. McCormack Graduate School of Policy Studies, University of Massachusetts Boston and Wider Opportunities for Women, concludes that many Massachusetts elders regularly struggle to make ends meet. Living costs are among the highest in the nation, especially in housing and health care. In the face of rising expenses, many elders’ incomes at best see a modest cost of living adjustment each year; they are spending down retirement savings, and/or face growing debt. At the same time, seniors may be prepared for the present but face a challenging future if their life circumstances change due to illness, loss of a spouse, or need for help with daily tasks.

This report focuses on the challenges of meeting expenses for low- and moderate-income older adults. Census data reports that 22% of Massachusetts elder households aged 65-74 had 1999 incomes under $15,000 and 38% had incomes under $25,000; of those 75 years and older, 34% had incomes under $15,000 and over half had incomes under $25,000. With inflation, $15,000 represents $17,584 in today’s dollars, and $25,000 represents $29,307 today.

The study found that:

1. Elders who live alone in Massachusetts cannot make ends meet at the poverty level or at the

average Social Security payment without subsidies for housing and health care.

• Depending on their housing, health and geography, elders living alone in Massachusetts need between

$14,700 and $28,100 to cover basic living costs. The federal poverty level for a one-person household in

2006 is $9,800.

• The average Social Security payment for a retired elder in 2006 is $12,024, less than half of what some

elders in Massachusetts need to cover their basic expenses.

• Social Security is the only source of income for three out of ten retired elders.

2. Elder couples in Massachusetts cannot make ends meet at the federal poverty level or at the average

Social Security payment without subsidies for housing and health care.

• Depending on their housing, health and geography, elderly couples in Massachusetts need between

$21,400 and $39,100 to meet their basic household budgets. The federal poverty level for a two-person

household in 2006 is $13,200.

• The average Social Security payment for a retired elder couple in 2006 is $19,776, half of what some

elder couples in Massachusetts need for basic costs.

• Social Security is the only source of income for one out of nine retired couples.

3. Massachusetts’ high housing costs put a heavy burden on elder households, from 33 to 52 percent of total expenses, depending on their living circumstances.

• The Elder Standard reflects wide variation in housing costs depending on whether elders own or rent and

by community. Elders who own a home without a mortgage typically face lower housing costs than

those paying fair market rents. Elders paying a mortgage face even higher housing costs.

• The monthly cost for elder homeowners without a mortgage ranges from a low of $419/month in

Hampden County (33%  of total budget) to $605/ month in Norfolk County (41% of total budget).

• The monthly cost for elders paying fair market rent for a 1-bedroom apartment ranges from a low of

$545/month in Berkshire County (36% of total budget) to a high of $1,200/month in Nantucket

County (52% of total budget).

4. The Elder Standard shows health care costs are the second largest expense for Massachusetts elders,

who need to purchase full supplemental health and prescription drug coverage to Medicare.

• The Elder Standard includes premium costs of full supplemental health and prescription drug coverage

to Medicare, because they are needed to have protection against high medical and prescription drug

costs. Co-pays, deductibles and fees are added which vary according to elders’ health status.

• Elders in Massachusetts face combined health care costs (premiums plus co-pays, deductibles and fees) of $252-$390 per month to have protection against high medical and prescription drug costs. The highest costs are in Berkshire, Dukes and Nantucket counties, because there are no lower cost managed care plans available.

• Retired couples are unable to purchase supplemental health insurance through a “family plan;” they must

each buy it as individuals. For elder couples, the costs are doubled, ranging from $504-$780 per month.

5. Some elders who are currently making ends meet face uncertainty if their life circumstances change,

such as losing a spouse or experiencing a change in health status.

• A member of an elder couple paying market rate rent in Massachusetts has expenses reduced by only 25-36% when a spouse dies yet their income can decrease substantially based on the mix of Social Security and/

or pension income.

• Having full supplemental health and prescription drug coverage to Medicare (including Prescription

Advantage) helps protect elders from a dramatic rise in health care costs with a decline in health, but the

added cost is still sizable.