The Elder Index benchmarks basic costs of living for elder households and illustrates how costs of living vary geographically are based on the characteristics of elder households, including household size, home ownership or renter status, and health status. The costs are based on market costs for basic needs of elder households and do not assume any public or private supports.
For single elders in good health the statewide Minn. Elder Index is $16,767 (for homeowners without a mortgage) or $19,090 (for renters). This represents the living expense costs (housing, health care, transportation, food and miscellaneous) for elders age 65+ in Minn.
Average Social Security benefit for Minnesota elders is $13,059 per year for an individual. This represents only 78% of the statewide Elder Index for homeowners with no mortgage or 68% of the statewide Elder Index for renters.
In other words, if an Elder has only Social Security for income, they are realizing about a $3,700 to $6,000.
Minnesota Elder Index = $26,486
For elder couples in good health, the statewide Minnesota Elder Index is $26,486 for homeowners without a mortgage. This represents the living expense costs (housing, health care, transportation, food and miscellaneous) for couples including at least one elder age 65+ in Minnesota. The Elder Index is much higher than other commonly used income benchmarks.
- The federal poverty guideline is $14,000 per year for elder couples. This is only 53% of the statewide Elder Index for homeowners with no mortgage.
- The average Social Security benefit for Minnesota couples is estimated to be $21,243 per year. This represent only 80% of the Elder Index for homeowners with no mortgage.
Low-Income elders in Minnesota with income at the federal poverty level or with only an average or lower Social Security benefit but no additional resources, cannot meet their basic living expenses.
- The average elders living alone need between $15,660 and $21,334 per year to cover basic living expenses. (Rochester is would be at the high end of these figures.)
- Couples need $25,396 – $30,873 to meet their basic needs.
Elder Index Expenses for Elder couple living in Minnesota
- Total Annual Expenses for Owner without Mortgage $26,486
- Total Annual Expenses for Owner with Mortgage $34,757
- Total Annual Expenses for Renting one bedroom $28,809
- Owner without Mortgage $16,767
- Owner with Mortgage $25,038
- Renting one bedroom $19,090
Social Security is the only source of income for one out of five seniors in Minnesota, the majority of whom are women.
Housing Costs = 42% of Expenses
Housing costs (mortgage or rent, taxes, utilities and insurance) put a heavy burden on some elder households, representing as much as 42% of their total expenses.
- The monthly costs for elder homeowners with a mortgage is $521 in the city of Minneapolis
Health Care Costs
The Elder Index shows the significance of health care costs for Minnesota elders who must purchase supplemental health and prescription drug coverage to Medicare.
- Elders in good health face combined health care costs (insurance premiums plus co-pays, deductibles, fees, and other out-of-pocket expenses of $288-$322 per month to have protection against high medical and prescription drug costs.
- Retired couples are unable to purchase supplemental health insurance through a “family plan” must each buy coverage as an individual. Thus, combined health care costs are doubled for elder couples, ranging from $576-$644 per month.
Social Security Gap for Men = $3800; for Women = $8,000.
Gaps between typical elder incomes and economic security vary, but typical incomes for elder women fall short of economic security throughout the state. In 2008, single women renters” statewide median annual income in retirement fell short of economic security by more than $4,000 in Minnesota’s less expensive counties and by more than $8,600 in more expensive counties. The average Social Security payment for a single Minnesota retiree does not allow economic security in any of the state’s counties regardless of whether the elder is a renter or homeowner. In 2008, typical Minnesota renters who relied entirely on a local average Social Security payment for men fell more than $3,800 short of economic security.
A typical Minnesota renter who relied entirely on the local average Social Security for women fell nearly $8,000 short of economic security. However these payments were high enough to disqualify Minnesota elders from receiving critical public assistance.
Average Social Security Income Payment
The average SSI benefit in Minnesota in 2008 was $1,088 per month ($13,059 per year) is higher than the Federal Poverty guidelines but well below the Elder Index for homeowners without a mortgage.
In 2007 13% of Minnesota households aged 65-74 had incomes under $15,000; over half had incomes under $25,000.
Poverty rates for older women are nearly twice as high as for older men (10% for women, 5% for men).
Reasons why not use the Federal Poverty Benchmark when determining
Elderly Income Security
Comparison to other Benchmarks of Income:
Federal Poverty Guidelines. The average after-tax income required by an elder living alone in Minnesota is 61-84% higher than the official poverty guidelines. In 2008, under the federal poverty guidelines a single adult household I “poor” only if he or she has a monthly income of $867 ($10,400 per year) or less.
The average after-tax income required by an elder couple in Minnesota is 1.9 to 2.1 times that official poverty guidelines. Under the Federal poverty guidelines (2008) a two-adult household is poor if it has a monthly income of $1,167 ($14,000 per year.)
Couples SSI: The estimated average SSI benefit for an elder couple in Minnesota in 2008 was $1,770 per month ($21,243 per year). It is well below the Elder Index for homeowners without a mortgage.
According to the Federal poverty threshold and 2007 American Community Survey data, an estimated 8% of Minnesota’s elders were considered “poor” and even more Minnesota seniors were just above the poverty threshold. A full 19% were estimated to have incomes at or below $150 of the poverty threshold.
Why the Federal Poverty Threshold is misleading at best and useless at worst.
The poverty thresholds are drawn from the original version of the Federal poverty measure. The poverty thresholds were first calculated in the 1960’s by taking the cost of food needed to meet the minimum nutritional needs of adults of different ages, and multiplying this by three. This figure was then used as the reference point for the amount of income needed to live at a basic level. This calculation was based on consumption surveys conducted in the late 1950’s showing that US families spent about one-third of their incomes on food. Since that time, the thresholds are updated each year by the change in the consumer price index (CPI)
Despite this reliance on outdated connection to households’ food costs alone, the poverty thresholds continue to be used. As a result, the official us poverty thresholds are lower for adults 65 and older than for younger adults. The federal poverty thresholds do not consider age variability in an other costs; e.g., housing, health care, transportation or long-term care.
Furthermore, the outdated poverty measure assumes households spend a fixed ratio of one-third of their incomes on food. In addition, it does not allow for different rates of inflation for different living expenses; e.g., health care and housing costs have rise much more that food costs. Finally, it does not reflect variations in living costs according to regions or cities.
 Elder Economic Security Initiative Program: The elder Economic Security Standard Index for Minnesota. Minnesota Women’s Consortium, UMass Boston and Wider Opportunities for Women. 2009.
 The Elder Index is much higher than other commonly used income benchmarks.
 Elder Economic Security Initiative, 2009.
 Elders Living on the Edge: When Basic Needs Exceeds Available Income in Minnesota. Minnesogta Women’s Consortium and Wider Opportunities for Women. 2006.
 Elder Economic Security Initiative, 2009.
 I am making the assumption that the costs in Rochester are similar to the costs in Minneapolis.
 Since these statistics were published, The Affordable Care Act was enacted. I do not have the costs based on the ACA.
 Elders Living on the Edge: When Meeting Basic Needs Exceeds Available Income in Minnesota. Minnesota Women’s Consortium and Wider Opportunities for Women. 2009.
Elders Living on the Edge. When Meeting Basic Needs Exceeds Available Income in Minnesota, 2009. Wider Opportunities for Women
The Elder Economic Security Standard Index for Minnesota. 2009. Minnesota Women’s Consortium, UMass Boston, and Wider Opportunities for Women.
Elder Economic Insecurity, Presentation: http://www.olmstedcounty.us/elder-econ-insecurity-2017/
Elder Economic Security, Write Up: http://www.olmstedcounty.us/elder-economic-security/