Tracking Income Adequacy Using the Elder Index

Many older adults lack the resources to support a financially secure lifestyle. Capturing the scope of this problem and evaluating the efficacy of programs designed to safeguard the well-being of older adults requires a reliable tool for measuring how much income older adults actually need to remain independent.  The Elder Index is such a tool. Used nationwide, the Elder Index measures the costs faced by households that include one or two adults aged 65 or older¹, based on local costs of housing (including utilities, taxes, and insurance), food, transportation, and healthcare, plus a small amount for miscellaneous essentials (e.g., clothing, cleaning supplies). This tool defines financial security as the income level at which older adults can cover basic expenses necessary to live in their homes without relying on transfers, gifts, or loans. The Elder Index is a basic budget, allowing no vacations, restaurant meals, savings, gifts, or entertainment. Values are produced for singles and couples; for owners without a mortgage, owners with a mortgage, and renters; and for people in good, excellent, and poor health. For details on the data sources used for the Elder Index, see https://elderindex.org/.

This short report draws on Elder Index data for calendar years 2015 through 2024, yielding three key findings:

1. The cost of living independently has increased substantially for older adults between 2015 and 2024;

2. The cost of living varies widely across the U.S.;

3. Every state, the Elder Index far exceeds thresholds commonly used to establish eligibility for needs-based services—specifically, those based on the Federal Poverty Level (FPL).

Living Costs for Older Adults Have Increased Sharply Over the Past Decade

The cost of living independently in later life has steadily increased over the previous decade (see chart above). Between 2015 and 2024, the Elder Index for singles increased from $19,872 to $25,188 for owners without a mortgage (up by 27%) and from $30,516 to $38,988 for owners with a mortgage (up by 28%). However, for renters, the Elder Index increased by 33%, from $23,088 in 2015 to $30,792 in 2024. Rates of increase for couples are slightly lower than for singles, with values for homeowners increasing by 25% among those without a mortgage and 26% for those with a mortgage, but 30% among renters (see chart below). For both singles and couples, the FPL increased by 28% during this time frame but consistently fell far short of the Elder Index.

The Federal Poverty Level Understates Economic Need Among Older Adults

The Elder Index is far higher than the Federal Poverty Level in every state, for both singles and couples (see the red line in the chart below). Nationally, the Elder Index shows that older adults need a bit more than twice the FPL to maintain a modest but adequate standard of living. In low-cost states (e.g., Alabama) the Elder Index is lower than twice the FPL and older adults there may need less income to get by. In contrast, in high-cost states (e.g., Washington and Massachusetts) the Elder Index is substantially more than twice the FPL, meaning older adults in these places need much more income than the federal poverty level to meet basic needs. In every state, but especially in states with higher costs of living, official poverty statistics underestimate the true level of financial insecurity among older adults. Consequently, programs intended to promote financial security that use the FPL as a basis for eligibility serve only a fraction of older adults who need assistance to remain independent. 

As the older population grows, the federal government and each state must consider how policies can contribute to the financial security of older adults living above the FPL but below the Elder Index, as they also require services and supports that contribute to intermediate- and long-term stability goals. Achieving financial security, rather than avoiding poverty, is a goal to which older people and those who represent and serve them aspire. Social Security benefits and Medicare, as well as state- and community-based services and supports that extend the financial security of older adults, are essential mechanisms for safeguarding the well-being of older adults, including not only those who are poor by federal standards but also for those living in the gap between the FPL and the Elder Index.

Acknowledgements
We are grateful for the partnership of the West Health Institute, The Silver Century Foundation, The Henry and Marilyn Taub Foundation, RRF Foundation for Aging, and the National Council on Aging.

About the Elder Index
The Elder Index^TM is a one-of-a-kind, county-by-county measure of the income needed by older adults to maintain independence and meet their daily living costs while staying in their own homes. Developed by the Gerontology Institute at the University of Massachusetts Boston in collaboration with a national Advisory Board, the Elder Index defines financial security as the income level at which older people can cover basic and necessary living expenses and stay in their homes, without relying on means-tested income support programs, loans or gifts. The Congressional Budget Office (2017) cites the Elder Index as the only retirement adequacy measure that is oriented specifically to older people and takes into account the unique demands of housing and medical care on older people’s budgets.

Elder Index and Elder Economic Security Standard Index are service marks of the University of Massachusetts.

For more information about the Elder Index, including county-level Elder Index values for renters and homeowners, and values for older adults in poor or in excellent health, see ElderIndex.org , Center for Social and Demographic Research on Aging , or contact us at CSDRA@umb.edu .

Read examples of how states and organizations use the Elder Index to promote financial security in later life.