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Risk of Economic Hardship Among Older Adults Issue Brief

Publication Date

Risk of Economic Hardship Among Older Adults

Richard W. Johnson and Melissa M. Favreault
Urban Institute

Judith Dey, William Marton, and Lauren Anderson
Department of Health and Human Services

January 2021

Link to HTML Version (10 PDF pages)

ABSTRACT: The need for long-term services and supports (LTSS), such as home care, nursing home care, and other residential care, creates financial hardship for many older Americans. Based on microsimulation modeling, we estimate that 15% of older adults who survive to age 65 have household income that falls below the federal poverty level for at least 1 year. This estimate increases to 69% when we use a broader measure of economic hardship that subtracts from income out-of-pocket spending on health care and LTSS. Steep health care and LTSS costs threaten financial security for older Americans across the income distribution, including those who might otherwise be well-prepared for retirement. About 3 in 10 older adults in the top quintile of lifetime earnings will experience economic hardship for at least 3 years after taking into account health care and LTSS spending. The vast majority of older people who receive extensive paid LTSS will experience economic hardship for multiple years.

The full report on which this brief is based is "Economic Hardship and Medicaid Enrollment in Later Life: Assessing the Impact of Disability, Health, and Marital Status Shocks," available at The DYNASIM projections were developed by Melissa Favreault, Karen Smith, Paul Johnson, Doug Murray, and Damir Cosic at the Urban Institute, with conceptual and modeling help from William Marton and Brenda Spillman. All errors are our own.

This report was prepared under contract #HHSP233201600024I between HHS's ASPE/BHDAP and the Urban Institute. For additional information about this subject, you can visit the BHDAP home page at or contact the ASPE Project Officers, at HHS/ASPE/BHDAP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C., 20201;,,

DISCLAIMER: The opinions and views expressed in this report are those of the authors.  They do not reflect the views of the Department of Health and Human Services, the contractor or any other funding organization. This report was completed and submitted on October 2020.