Wealth Gaps in the Golden Years: Economic Insecurity for Older Adults in a High-Cost State

By Kelly Harrington, Luc Schuster Boston Indicators. Laura D. Quinby, Center for Retirement Research at Boston College

Across the nation, many older adults struggle to make ends meet. The Elder Index, produced by the Gerontology Institute at UMass Boston, suggests that roughly 30 percent of older households have incomes below what it takes to meet basic needs and age in place. It is not clear, however, how Massachusetts compares to the nation in terms of retirement security. On the one hand, Massachusetts is a relatively wealthy state. On the other hand, it has a high cost of living and persistent economic inequality, making low-income seniors and seniors of color particularly vulnerable in retirement.
Thanks in part to a generous grant from the Barr Foundation, Boston Indicators, in collaboration with the Center for Retirement Research at Boston College, are pleased to release this mixed-methods project that examines financial security for retirees in Massachusetts in two parts.

Part 1, authored by Laura Quinby at the Center for Retirement Research, is a quantitative analysis, exploring the sources of income and wealth available to older households in Massachusetts, estimating the share of older households falling below Elder Index thresholds; and documenting racial disparities in retirement security. Key findings from this analysis include: Wealth among older households in Massachusetts is high, but it is unevenly distributed. Those in the top third of older households in the state have more than $3.5 million in wealth on average, while the bottom third averages just over $50,000. Income is less unevenly distributed than wealth, and low-wealth older households in Massachusetts are only modestly better off than elsewhere. When adjusted for cost of living, a large share of older households in Massachusetts cannot meet basic needs. Roughly 80 percent of low-wealth older households in Massachusetts have income less than what it takes to age in place, as measured by the Elder Index, compared to 63 percent nationally. Racial disparities in resources are especially severe for older households in Massachusetts. Nearly three-quarters (74 percent) of non-White older households in Massachusetts fall into the bottom third of the state’s senior wealth distribution, compared to just 54 percent in other states.

Part 2, authored by Kelly Harrington at Boston Indicators, is a qualitative analysis, presenting findings from structured interviews with low-income, low-wealth seniors to understand what strategies they use to make ends meet. Key findings from this analysis include:  Social Security is essential, with most relying on it as their primary or sole source of income.   Retirement savings and pensions are limited or depleted.   Many older adults must adjust to a lower standard of living in retirement.   Subsidized housing is a lifeline for many seniors.   Other public benefits are essential.  Older adults are resourceful but constrained.