- 46% now die with £10,000 or less saved
- Many do not have cash to absorb financial ‘shocks’ such as big medical bills
- Single retirees more likely to be poorer
By Sam Adams
PUBLISHED:03:48 EST, 31 August 2012| UPDATED:09:08 EST, 31 August 2012
It’s a time of life when most folks hope to enjoy some financial security.
But nearly half of elderly Americans now die with little money saved, a new study has found.
Research by the National Bureau of Economic Research, revealed that 46 per cent of retirees now reach the end of their lives with just $10,000 or less in reserve.
The findings reveal the true scale of the financial vulnerability of many elderly households.
Experts found many retirees do not have the liquid assets to absorb ‘shocks’ such as big medical bills.
But while some elderly people struggle to make ends meet others enjoy wealth and health throughout their retirement.
The survey looked at the financial situation of retirees between 1993 and 2008.
James Poterba, professor of economics at M.I.T., president of the National Bureau of Economic Research, and a co-author of the study, said the low level of savings did not mean all pensioners were suffering in poverty.
‘That doesn’t mean their standard of living is very low – they might have a relatively generous pension plan, most of them will have Social Security,’ he told The Wall Street Journal.
However, he said the figures ‘suggest something about the financial resiliency of these households.’
‘They may not have much capacity to absorb a shock, such as an out-of-pocket medical expenditure.’
When other measures of wealth are taken into account – such as equity in the value of property, and the value of pensions – the outlook for many retirees appears less worrying.
Single people in the study had average assets of about $142,000, while those whose husband or wife had died had around $253,000.
ELDERLY POVERTY
- Nearly half of pensioners have savings of $10,000 or less
- Richer pensioners tend to live longer
- Married pensioners tend to be wealthier
- Nearly 60 per cent of singles are worse off
Couples where the retiree surveyed had died but their husband or wife was still living had average assets of more than $690,000.
Of particular concern was the relatively big fall in income faced by retirees whose partners had died.
While the income of single people and married couples remained comparatively stable, the income of retirees whose spouse had died fell by almost 75 per cent during the course of the survey.
It is unclear why this group is so badly affected, but a drop in pension benefits is believed to be one of the causes.
Their income fell by nearly three quarters during the course of the survey, The Wall Street Journal reports.
The rich and those who stay married were also more likely to be better off financially according to the study.
Nearly 60 per cent of people who are single throughout the course of the survey had just $10,000 in savings when they died.
Married people are likelier to have equity saved in their property