Sen. Bernie Sanders has repeatedly claimed that 1 in 5 seniors “live on an average income of $7,600 a year.” The reality is not quite so shocking.
- After we inquired, the expert who generated that income estimate revised it upward to $8,263, using more up-to-date figures and adjusting for a minor mistake.
- Furthermore, that income figure does not count such non-cash government benefits as food stamps, housing assistance, Medicare or Medicaid, or proceeds from reverse mortgages. Nor does it include personal funds such as savings or insurance proceeds.
Sanders has made his remarks on senior income more than once, most recently in a Senate floor speech on senior hunger. The Vermont senator, who is running for the Democratic presidential nomination, is seeking more funding for senior programs through the Older Americans Act.
Sanders, June 16: The truth is — and this is really a shocking truth — that 20 percent of seniors in America live on an average income of $7,600 a year. Between us, I don’t know how anybody can live on $7,600 a year, let alone older people who need more medicine and more health care.
He used the same figure on Jan. 16 and April 10.
However, that figure is too low. And it’s not correct to say that these low-income seniors “live on” that cash income alone.
$7,600, Updated and Corrected
When we asked where Sanders got his $7,600 figure, his campaign referred us to Eric Kingson, a professor of social work at Syracuse University and an outspoken advocate of raising Social Security benefits. Kingson, in a telephone interview and an exchange of emails, told us he had calculated the figure using statistics published by the Social Security Administration for the year 2008. Since then, the SSA has issued updated figures covering 2012, which are now the most recent available.
Using the more recent figures, and also correcting for what he termed a “minor” mistake (he says he failed to include a slice of households with income between $13,000 and $13,999 who are just at the top of the lowest 20 percent), Kingson said the correct income figure should be “about $8,263.”
Strictly speaking, this is not a perfectly accurate average. To calculate that, we would need access to the SSA’s survey data on each household, allowing us to add up all the incomes of all households and then dividing by the number of households. But we’ve looked over Kingson’s calculations and agree that given what’s available, his assumptions are reasonable and the $8,263 figure is a close approximation.
But — it’s not all that the bottom 20 percent is “living on.” That cash income figure – which includes things such as interest and dividends, as well as withdrawals from tax-deferred plans such as an IRA or 401(k) — covers total cash income for households made up of a single person age 65 or older, or a married couple where at least one spouse is age 65 or older, but it does not include many resources commonly available to seniors, especially low-income seniors.
What’s Not Included
For example, food stamps and housing aid are not counted, according to the Social Security Administration. Especially for the lowest-income seniors, those can be significant sources of support. In fiscal year 2014, for example, the average monthly food-stamp benefit per person was more than $125, for a total of more than $1,500 for a full year. And in 2011, the Obama administration announced $749 million in so-called Section 202 grants to help nonprofit groups provide housing aid for very low-income elderly people. Those and other federal assistance programs result in lowered rents for many years to come.
Also not counted in the “cash income” figure is financial assistance from the federal Low Income Home Energy Assistance Program, which laid out nearly $3 billion in block grants to states last fiscal year.
And since Sanders made a point of mentioning medicine and health care, it should be noted that Medicare reimbursements also are not counted as cash income. Also absent from the official definition of income is the value of Medicaid, the federal-state program that provides additional benefits, including long-term care in nursing homes, for low-income elderly people.
Loans — including proceeds from so-called “reverse mortgages” — are also not counted as income. A total of more than 900,000 reverse mortgages have been issued since 1990. Nearly all go to those over age 65, as a borrower must be at least 62 to qualify and the average age of those taking out such a loan for the first time was nearly 72 as of 2012, the last year for which the government produced such information.
Other receipts not counted as “income” are withdrawals from savings, insurance proceeds, gifts from relatives or friends, capital gains (such as profit from sale of a personal residence), and any lump-sum insurance payments or inheritances, such as those from a deceased spouse.
We have no way of calculating how much all these kinds of receipts would add to the average if they were counted as “income” — but there’s no question that many seniors rely on them to “live on.”
Average Versus ‘Less Than’
Sanders arrives at a low figure by focusing on the average cash income of all those in the bottom 20 percent — many of whom by definition bring in more than the average. The Social Security Administration says those in the bottom 20 percent earn up to $13,292, which is the upper limit of the bottom “quintile,” or bottom fifth. (See the footnote on Table 10.5)
We don’t mean to dismiss the hardships faced by the least affluent seniors among us, which can be substantial. Sanders would have been correct to say that 20 percent of seniors in America lived on cash income of less than $13,292 in 2012 — not counting non-cash government assistance. That’s a meager figure, to be sure. It’s just not quite the “shocking truth” that Sanders would have voters believe.
— Brooks Jackson