Millions of senior citizens are living in poverty without financial assistance from the federal government that they are eligible to claim. And according to research, most of them are single women.
The question is, why?
Supplemental Security Insurance, or SSI, is government-provided income designed to bring an individual’s income up to a minimum level. According to the Social Security website, to be eligible, you must be at least age 65 or, if under this age, you must be blind or disabled. You must also meet stringent financial thresholds.
At the end of 2012, more than 8 million Americans were receiving SSI, and roughly 25% were over age 65.
According to Kathleen McGarry, a professor at UCLA who focuses on financial issues that affect the elderly, more than half of the elderly who are eligible for SSI, are not receiving it.
Alhough the SSI program is overseen by the Social Security Administration, benefits do not come from Social Security tax collected from workers. (1) Instead, SSI benefits are paid out of U.S. Treasury general revenues- largely funded by income taxes from individuals and businesses. In addition, many states add their own money to what the federal government provides, thus raising the amount an individual is eligible to receive.
Supplemental Social Insurance was created in 1972 when Congress replaced a patchwork quilt of state benefits to the poor with a national program. However, the amount provided by the federal government today is not even enough to raise someone’s income above the poverty line. Federal guidelines allow enough of a benefit to bring a single individual’s monthly income up to $721 per month, which is $252 (26%) below what is officially considered “poverty” level. A married couple will receive enough assistance to raise their monthly income up to $1,082 per month, which is 17% less than the “poverty” definition of $1,311 per month. This is why all but five states supplement this program to a varying degree.(2)
In additional to the age and disability requirements, in order to receive Supplemental Security Insurance you must be a legal resident of the United States, live in this country most of the year and be either a U.S. citizen or meet the criteria for “qualified non-citizen.”
Unlike Social Security benefits, there is no requirement that you worked outside the home to claim SSI. However, you must demonstrate that you have both a low income and a low level of assets.
Income is calculated on a monthly basis and includes payments you receive from a job, financial assistance from family members as well as non-financial help with housing or food. There are many exceptions. For instance, the value of food stamps or groceries provided by a public charity does not count as in-kind income. Neither do occasional amounts of money that, say, your children give you. (Click here to learn what does and does not count as “income.”)
After you total up your monthly income--which includes Social Security--a few simple adjustments are made: $20 is subtracted off the top (just because), next, subtract $65 worth of wages (which rarely applies to those 65 or older) and then half of all wages above $65. If the amount comes to less than $721(single) or $1,082 (married), you’ll get a benefit that will bring your monthly income up to that. For instance, suppose you are 70 years old, single and not working. Your only source of income is your monthly Social Security Benefit of $500:
1) Total monthly income
$500 (Social Security benefit)
-$20 (Not counted)
$380 (Countable income)
$721 (SSI federal benefit level)
-380 (Countable income)
$341 (SSI federal benefit amount)
If you live in a state that has a higher benefit level than the federal government, the state will pay an additional amount. For instance, California’s benefit level for a single beneficiary is $877.40- $156.40a month above the federal benefit level. A married couple residing in California will get $396.20 more than the federal rate, bringing their SSI benefit to $1,478.20.
The Assets Test
If you meet the income requirement for SSI, you can still be denied a benefit if your assets are considered too high. For singles, the threshold is $2,000. For married couples, it’s $3,000. “Assets” include bank accounts, CDs, retirement and investment accounts.
Surprisingly, the biggest asset most individuals own- their home- is not counted. You can also own a car worth up to $4,500 if it’s needed to get to work or the doctor, a life insurance policy worth $1,500 and a minimum amount to cover burial expenses.
The problem, says McGarry, is that, although SSI benefit amounts are increased annually for inflation, the income allowances and asset thresholds used to determine eligibility are the same as they were back in 1989. As a result, only “a poorer and poorer segment of the population is getting any benefit.” If these amounts were indexed to the cost of living, she estimates allowable assets would increase to roughly $7,000 for single individuals and $10,500 for couples, enabling many more individuals to qualify.
In addition to boosting your monthly income, qualifying for SSI automatically makes you eligible for Medicaid and probably food stamps, as well. Which brings us back where we started: Why is it that 56% of the elderly who qualify for SSI- even under today’s ridiculously low limits on income and assets- are still not receiving assistance?
Research by McGarry and others suggests one possibility is that some seniors might not know about the program. It’s also conceivable that some people might think that if you receive Social Security you cannot also get SSI. But, surprisingly, McGarry and others say a major reason so many economically-disadvantaged seniors are not taking advantage of SSI is… pride.
“These are people who survived the Depression,” says McGarry. “They don’t want to take assistance. Imagine that you’re 75 years old. You’ve always supported yourself. You don’t want [your life] to end this way.”
Perhaps you know an elderly person- a family member, a neighbor or someone where you worship- who struggles with everyday expenses. Maybe they skip meals because they can’t afford to buy the food they need. Or their home is always cold so they can save money on heat in the winter.
These are precisely the individuals SSI was created to help. We are a rich country. We can afford to help our most vulnerable citizens. It’s fashionable to complain about people who “work the system” to get benefits they are not really entitled to. It’s equally shameful so many who are truly needy, are doing without.
1) Some states have chosen to administer the SSI program themselves.
2) The following jurisdictions do not provide any additional money to supplement the federal SSI benefit amount: Arizona, North Dakota, Mississippi, West Virginia Northern Mariana Islands
Ms. Buckner is a Retirement and Financial Planning Specialist and an instructor in Franklin Templeton Investments' global Academy. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content.
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