Prosperity Watch (Issue 68, No. 1): Social Security Alone Fails to Provide a Secure Retirement for Seniors

Dec. 5, 2016

A growing number of North Carolina’s seniors lack access to sufficient savings opportunities. According the U.S. Census Bureau, 9.2 percent of the state’s seniors, age 65 and older, experience poverty. For people above 75, that number rises to more than 10 percent. But without important social supports like Social Security and SNAP, the senior poverty rate would be much higher. In fact, on average from 2011 to 2015, Social Security benefits lifted more than 1 million North Carolinians out of poverty each year.

While older North Carolinians experience poverty at rates lower than the rest of the state, the reality is that the federal poverty line fails to accurately measure the true living expenses of older North Carolinians. The Elder Economic Security Standard Index helps to paint a picture of what true retirement security looks like. By measuring expenses specific to older North Carolinians, it finds that typical living expenses for a single elder in good health totals $21,372 a year. For a couple, typical living expenses are $32,100.

Although Social Security is an invaluable resource, the benefits fall short of what seniors need to enjoy a secure retirement. In November, the average Social Security benefit was $16,112 for a single retiree and $26,978 for a couple. These benefits fall more than $5,000 short of what a typical North Carolinian senior needs. While many seniors rely on other types of income to support themselves during retirement, these alternative forms of savings are slowly disappearing. From 2001 to 2013, the percentage of workers without access to an employer provided pension plan grew from 54 to 60 percent.

Because Social Security benefits are based off of work-life earnings, there are also large gender gaps in the benefit amounts. On average, women received an annual benefit of $14,371 while men received $18,078. This gender gap in benefits also contributes to the fact that North Carolinian women age 65 and above experience poverty at a rate of 11 percent compared to only 6.9 percent of men in the same age range.

Fortunately, there are a variety of policy options which can help to reduce senior poverty. Expanding Medicare to cover long-term care expenses, strengthening Social Security, allowing private sector workers to participate in North Carolina’s state pension plan, and raising the minimum wage would all go a long way in ensuring our seniors enjoy a well-deserved and secure retirement.

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