A sobering thought on International Day of Older Persons

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October 1 is International Day of Older Persons, a day to raise awareness about issues affecting older people and to appreciate the contributions they make to society.  So it is fitting that today we look at how older Americans are faring in retirement. One way to measure the wellbeing of the elderly is to measure the degree to which they live in poverty. By measuring poverty, we are able to learn the extent to which a nation's retirement system provides adequate income.

According to recently released U.S. Census Bureau data, the number of seniors 65 and older living in poverty in the United States decreased from 3.7 million in 2008 to 3.4 million in 2009. That's good news, right?  Well, not really.

As we've noted before, the poverty threshold for the elderly in the U.S. is woefully inadequate - lower than it is for the rest of the population and based on an outdated measure. If the standard were changed to a more reasonable definition, the poverty rate for older Americans would shoot up.

Looking at a different, and widely accepted international definition of poverty, nearly one-fourth of older Americans live in poverty.1 According to the Organization for Economic Cooperation and Development (OECD), 24 percent of the elderly in the United States have an income that is below the nation's median income (the OECD's measure of poverty). This is considerably higher than the average of 13.3 percent for the OECD nations, and places us 25th out of the 30 countries.

Only four OECD nations have higher levels of poverty among the elderly than the United States. South Korea has the highest poverty rate of 45 percent. Ireland's rate is 31 percent; Mexico's is 28 percent; and Australia's 27 percent.  New Zealand, the Netherlands, and the Czech Republic come out on top in the international comparison, with the lowest poverty rates -- just 2 percent.

It should be noted that, were it not for Social Security, the United States' old-age poverty rate would be even higher.

The United States' poor showing in international comparisons of poverty among the elderly should remind us on this, the International Day of Older Persons, that our patchwork system of private retirement plans does not provide a sufficient supplement to Social Security - nor does it provide the vast majority of older Americans with a secure and adequate retirement income. 

This blog entry was written by Robert Stowe England, consultant to the Pension Rights Center, as part of Retirement USA's "Wake Up, Washington!" Month and is cross-posted on the Pension Rights Center's Perspectives blog.

1. Organization for Economic Co-operation and Development. Pensions at a Glance 2009: Retirement Income Systems in OECD Countries. Table 2.1, page 72.



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