Study finds high levels of inequality among older Massachusetts residents – Center for Retirement Research
In a recent podcast, I discussed their research with Laura D. Quinby of Boston College's Center for Retirement Research (CRR) and Luc Schuster of Boston Indicators The wealth gap in the golden years: Financial insecurity among older adults in high-cost countries.
They examined financial insecurity among older adults in Massachusetts through quantitative analysis conducted by CRR and focus group studies of low-income older adults conducted by Boston Indicators.
data
Not surprisingly, the wealth of Massachusetts seniors is generally higher than the national average, but it's also more unevenly distributed than in most states—the top third has an average of more than $3.5 million, while the bottom third has an average of more than $50,000.
A large part of wealth inequality comes from homeownership, as homeowners benefit from price appreciation while renters do not. As a result, “a large proportion of families here do not have enough income to meet their basic needs and age at home with dignity,” Quimby said. Overall, about 40% of seniors in Massachusetts lack sufficient income to meet basic needs, compared with 30% nationally.
Racial differences are particularly stark. “So we have a disproportionate number of low-income, low-wealth households… that are black and Hispanic,” Quimby said. “That combined with the high cost of living means that here we have a very, very high proportion of older, black and Hispanic households that are not making the cut. [about 9 in 10 compared to 1 in 3 White households]…This is really shocking. “
How low-income seniors cope
Boston Metrics conducted in-depth interviews, primarily with Boston residents recruited by the nonprofits that serve them. Therefore, it is not a representative sample, but still paints a picture of how low-income older adults cope. “The idea is to, based on Laura’s findings, conduct a series of focus groups with the lowest income, lowest wealth group of seniors… to better understand…[how] They make ends meet,” Schuster explained.
Twenty of the 29 participants in the focus group live in subsidized housing, which is an important lifeline. “It's really been a huge game-changer and a lot of them have talked about how important this lifeline is to them. They've also talked about the importance of other public benefits like SSI, SNAP and MassHealth. [the state’s Medicaid program]”.
Boston may be unusual in terms of the availability of subsidized housing. “Our sense is that greater Boston, and specifically the city of Boston, has really done more than a lot of other major cities in the United States to provide subsidized housing for the lowest-income families. So we're doing something here.” Schuster said that while subsidized housing can help the poorest residents, middle-income families also need help.
The researchers were surprised by one particular finding: The participants were not heavily dependent on their adult children. “Some respondents were very vocal in saying they were trying to avoid asking their adult children for financial support because they didn’t want to be a burden to their parents. [them]” Shuster reported.
This finding may be due to the fact that many participants lived in subsidized housing. “We're talking to people at social service providers in Boston. There may still be a large number of low-income, low-wealth seniors living with adult children, especially in the suburbs.”
Continue working?
We discuss whether longer working hours can help lower-income older adults narrow the gap between financial resources and needs. “We often tell people that one of the best ways to achieve a secure retirement is to work as long as possible… Of course, many people are unable to continue working due to physical or health problems. So it's hard. On the one hand, you want people who really need to stop working to do so and still have a secure, dignified retirement. But on the other hand, work is a very powerful tool for improving financial security,” Quimby said.
There are other potential benefits to working longer hours. “Research shows it helps your mental health. It helps your physical health. It helps you maintain your social network.”
Policy recommendations
To help low-income older Massachusetts residents, Quimby recommended passing the Safe Choice Act, which would require most employers without a retirement plan to either adopt a retirement plan or help their workers enroll in a state automatic retirement account plan. Nearly half of private-sector employees in Massachusetts do not have access to employer-sponsored plans, according to Georgetown University. This move won't help today's retirees, but it could have a huge impact in the future. The plan passed the state Legislature earlier this year, but was vetoed by Gov. Maura Healey, who sent it back for further study.
Schuster recommended building more rental housing near public transportation so seniors can live in smaller areas while living in communities. This approach could also free up some single-family housing for young families and reduce the cost of home health care if caregivers could care for multiple seniors in one apartment building, rather than caring for individuals scattered throughout the community.
For more information about Harry Margolis, check out his Adventures in Aging in America blog and podcast. He also answers consumer estate planning questions on AskHarry.info. To stay up to date on the Squared Away blog, join our free email list.
