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EDUCATE, LEARN & GROW

  • Writer's pictureSenior Support Services

Financial Insecurity in the Elderly Population

Updated: Jun 28, 2023


A senior couple discusses with a financial planner
Senior populations are not as financially prepared as previous generations have been.

Overview of US and Canada’s Senior Population

Contrary to popular beliefs, a significant portion of the American and Canadian senior population lacks financial stability and is ill-prepared to support themselves in their later years. Astonishingly, 80% of individuals over the age of 60 do not possess adequate financial resources to cover the costs of long-term services such as home modifications or unexpected medical bills (Syre, 2020). The combination of the recent recession, high housing costs, and the repercussions of the COVID-19 pandemic has further exacerbated the financial burden experienced by the elderly population. Moreover, this issue of financial insecurity is even more prevalent among seniors from minority communities, particularly people of colour (POC). Within the realm of financial insecurity, there is also a concerning risk of food insecurity among older households. Various factors including physical limitations, lack of access to shops or supermarkets, and decreased social support contribute to this risk. Research by Gajda and Zychowicz (2021) highlights the direct link between a decline in financial resources and the risk of food insecurity in senior populations.


Dispelling the Biggest Misconceptions

While this may have been the case in previous decades, the elderly population is not predominantly wealthy. This trend of decreased financial stability of seniors has been worsening over the years. A financially-secure household for seniors encompasses the costs of housing, food, support services, and other essential needs. Conversely, researchers define an “at risk” household as one with some savings and assets that may meet their current needs but is unable to cover unexpected financial demands, such as those brought on by the COVID-19 pandemic (Syre, 2020). The prevalence of such “at-risk” households has significantly increased over the past decade in the US and Canada, with over two-thirds of adults aged 70 and older lacking the necessary finances to cover negative shocks (Syre, 2020). These shocks may include declining health, widowhood, or the loss of the ability to work or live independently (Combi, 2023).


Limited Accessibility to Long-term Care

While long-term care is often crucial for maintaining the physical, emotional, and cognitive well-being of individuals, it remains inaccessible to many seniors. The likelihood of requiring long-term care after the age of 65 has substantially increased, while access to these resources has diminished due to widespread financial insecurity among elderly households (Gajda and Zychowicz, 2021). It is estimated that half of people aged 65 and over will need significant assistance with two or more functional limitations or dementia-related issues. Approximately one in six seniors will require care for more than five years, with an average cost of $52,000 annually (Gajda and Zychowicz 2021).


Impact of Black, Brown, and POC Elderly Individuals

Racial and ethnic communities, particularly minorities, face health and wealth disparities compared to the White population. This raises an important and disconcerting question: do health problems accelerate wealth depletion differently for racial and ethnic minorities compared to White elders? (Kim and Lee, 2006). This issue is prevalent across North American countries, as the wealth gap and accessibility to necessary resources continue to widen. Statistical evidence on mortality rates reveals that Black and Brown elderly populations have shorter life expectancies compared to their White counterparts (Kim and Lee, 2006). Furthermore, specific diseases have a disproportionate impact on mortality within racial and ethnic groups. For instance, Black males face an increased risk of death from HIV/AIDS, prostate cancer, diabetes mellitus, and cerebrovascular disease compared to White males (Tjepkema et al., 2023). Similarly, Black females are at a higher risk of death from stomach cancer, diabetes, corpus uteri cancer, and other ailments than their White counterparts (Tjepkema et al., 2023). Inequality in wealth accumulation and income gaps throughout an individual's career contribute to these disparities. Visible minority groups are paid an average of 30% less than their other groups/populations in similar workplace settings (Wong, 2022). Consequently, older adults who belong to visible minority groups often find themselves in the lowest bracket of household net worth, typically $40,000 or less. Unfortunately, these elderly minorities are both the least equipped to handle financial shocks and the most likely to experience them in their elderly life.


Key Takeaways

  1. The majority of people over the age of 60 lack the financial resources to cover long-term care services or unforeseen financial shocks.

  2. Older households, even those with modest assets, are unable to afford extended periods of nursing home care or assisted living.

  3. Black individuals are particularly vulnerable to financial insecurity in later life, as well as health risks and limited access to resources.


Conclusion

The elderly population in Canada and the United States currently finds itself in a highly vulnerable position. There is a glaring lack of research, support, and outreach to address the needs of this demographic. Many seniors silently suffer from existing health problems while depleting their wealth or lack the necessary financial means to their needs. Policymakers must carefully examine the prevalence of diseases, the current economic landscape, and the patterns that vary by race and ethnicity. Nationwide access to resources supporting financial security in later life is essential for those in need.


References

Center, L. (2020, June 12). Older adults facing growing financial insecurity in retirement. The LeadingAge LTSS Center @UMass Boston. https://www.ltsscenter.org/older-adults-facing-growing-financial-insecurity-in-retirement/

Combi, S. (2023, April 19). 80% of Older Americans Cannot Pay for Long-Term Care or Withstand a Financial Shock, New Study Shows. The National Council on Aging. https://www.ncoa.org/article/80-percent-of-older-americans-cannot-pay-for-long-term-care-or-withstand-a-financial-shock-new-study-shows

Gajda, R., Jeżewska-Zychowicz, M. The importance of social financial support in reducing food insecurity among elderly people. Food Sec. 13, 717–727 (2021). https://doi.org/10.1007/s12571-021-01151-1

Kim, H., & Lee, J. (2005, April). Unequal effects of elders’ health problems on wealth depletion across race and ethnicity. The Journal of consumer affairs. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1477538/

Tjepkema, M., Christidis, T., Olaniyan, T., & Hwee, J. (2023, February 15). Mortality rates in Canada . Mortality inequalities of Black adults in Canada. https://www150.statcan.gc.ca/n1/pub/82-003-x/2023002/article/00001-eng.htm

Wong, D. (2022, February 24). Canada’s visible minorities earn significantly less than average: Stat can. Better Dwelling. https://betterdwelling.com/canadas-visible-minorities-earn-significantly-less-than-average-stat-can/


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