Aug 29, 2016

A Longevity Benefit?

     From John Turner at the Pension Policy Center:
In the United States, poverty rates for seniors increase at older ages.  The rates are higher for persons age 75 and older than for persons age 65 to 74.   Poverty rates increase at older ages because relatively more people fall into poverty as they age than exit poverty due to death. Persons who live longer may fall into poverty because of various life events -- their spouse dies, they have higher medical or long-term care expenses than expected, or their investment returns are worse than projected. As Americans live longer, they face an increased risk of outliving their savings.

This outcome of poverty rates increasing at older ages is not inevitable. In Ireland and Poland, poverty rates actually decrease for those age 75 and older compared to those age 65 to 74.  The explanation for lower poverty rates at older ages is a low-cost targeted policy intervention called a longevity insurance benefit. A longevity insurance benefit is a benefit that starts at an advanced age, such as age 82. Both Ireland and Poland provide such a benefit for their oldest citizens.  ...

1 comment:

Anonymous said...

Like most everything else, this idea is not new. The idea of providing a slight bump up in Social Security benefits to the very old has been around for years. It would usually begin sometime between ages 80-85 (but maybe even older) and be about an extra 1% per year for 5 years (ultimately 5%) and then stop.