The average older American living independently does not have the means to meet basic standards of living, according to a report published by Wider Opportunities for Women (WOW) and the Gerontology Institute at the University of Massachusetts Boston. The report, “Seniors Nationwide Are Nowhere Near Economic Security,” calculates the average income for retirees for each state in the country, as well as their costs of living. While older Americans in some regions are faring better than in others, their costs exceed their income by at least $1,000 per year in every state.
Based on the report, 24/7 Wall St. identified the 10 states with the largest gap between the costs of living and the average elderly income, also known as the economic security gap. In these states, the average independent senior is short at least $6,000 each year. In the worst case, the difference between expenses and income is more than $10,000 annually.
While there are no areas of the country where the cost of living is affordable for seniors, the states in Northeast and Southeast have the biggest problems. According to WOW CEO and President Donna Adkinson, seniors have lower incomes in the Southeast while Northeast states are the most expensive.
Most of the states with the largest disparity between elderly income and expenses have higher costs for all residents and are either in the Northeast or the Pacific. While expenses in these regions are higher than the rest of the country, basic necessities such as health care, food, housing and transportation affect the elderly even more — usually must rely on social security, pensions and noncash benefits to cover their costs.
Rent and mortgage payments are the biggest of these expenses, and the states in the Northeast and West Coast have among the highest home costs. According to Adkinson, “Housing cost is the largest expense for elders, and many retirees with fixed or largely fixed incomes pay for housing in markets driven by workers who are earning incomes adjusted for locally high cost of living.”
Rising health care costs also act as a heavy burden for seniors in these states. Between 2006 and 2009, the price of drugs used by older Americans rose by 26%, according to a report published recently by AARP. With health care costs among their biggest expenses, this increase is particularly hard on seniors. According to the WOW report, the average senior in several states needs to spend more than $400 each month on medication. As evidence of the problem, five of the six states with the most expensive health care for the elderly also have the largest economic security gaps.
Some of the states with the biggest economic security gap for the elderly are in the Southeast, where residents have a lower median income. Four out of the 15 worst states, which include Alabama, Louisiana, Mississippi and Tennessee, have only moderate costs of living. But because older residents in these states have less money, they cannot afford even these relatively low expenses.
24/7 Wall St. identified the 10 states with the biggest difference between median income for independent senior citizens and the amount WOW’s Economic Security Database estimates they need to meet a basic standard of living in their state. To identify the biggest cost drivers for these elderly residents, 24/7 Wall St. used the Economic Security Database’s Elder Index to calculate expenses by state for a single, renting, independent person over 65.
These are the 10 states where seniors cannot afford to live.