Finances

Not long ago, older Americans typically were poor. Once people stopped working, their fixed income from Social Security or a pension was rarely adequate to support them comfortably. Today, a greater number of older Americans have funds and investments that provide them with financial security. Nevertheless, about 11% of Americans 65 or over have incomes below the poverty line, despite the fact that for a person 65 or over living alone, the threshold for being classified by the government as living in poverty is stricter than it is for younger people. A person 65 or over living alone is not considered impoverished unless annual income is less than $7,990, compared with $8,667 for a person under 65. Some older people have limited resources but have assets, particularly homes, that prevent them from meeting the strict definition of poverty. Fluctuations in interest rates tend to hit older people hardest because of their reliance on what is often called investment income. High inflation rates hit older people hard as well, because their incomes do not usually adjust upward as prices increase.

Even with homes and investments, many older Americans may not have incomes that are sufficient to meet all of their needs. They may be unwilling or unable to sell their home, or they may be faced with increased expenses, such as for prescription drugs or in-home assistance. The complicated issues involving real estate and other investments and the need to plan for longer retirement periods have made careful financial planning and preparation an essential part of growing old.

The aging of the population has put a burden on the country's ability to pay for the services needed by older people. The proportion of the population 65 or over is increasing as the proportion of the population made up of adults under 65 is decreasing. The situation is similar or worse in most developed nations.

Many provided services involve medical care, but many others, including Social Security, do not. As the proportion of older to younger people increases, less financial and social support will be available for older people. This imbalance occurs because after retirement people pay less in taxes due to decreased earnings, while the proportion of workers available to pay more into the system decreases.