Aging in America: Income and Assets of People on Medicare

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1 Aging in America: Income and Assets of People on Medicare November 6, 2015 National Health Policy Forum Gretchen Jacobson, Ph.D. Associate Director, Program on Medicare Policy Kaiser Family Foundation

2 Exhibit 1 Understanding the income and assets of Medicare beneficiaries Income Most Medicare beneficiaries do not have earnings; most seniors are retired and most disabled beneficiaries are not able to work Beneficiaries income primarily comes from Social Security checks, as well as investments, pensions, and withdrawals from savings Savings Beneficiaries life experiences affect their ability to accumulate savings during their working years; beneficiaries gradually deplete their savings over time Home equity Beneficiaries home equity is tied to their ability to afford to purchase a home during working years and number of years of homeownership Many policy proposals would vary Medicare benefits by income or increase out-of-pocket costs for beneficiaries Important to understand the variation in income and assets of Medicare beneficiaries

3 Exhibit 2 Distribution of income among Medicare beneficiaries, % had incomes above $163,600 5% had incomes above $93,000 50% had incomes below $24,150 25% had incomes below $14,350

4 Exhibit 3 Median per capita income of Medicare beneficiaries, overall and by selected characteristics, 2014 Race/ethnicity Age Marital Status $27,450 $29,700 $28,300 $24,150 $24,800 $16,150 $12,800 $17,050 $18,850 $20,500 $21,800 $14,450 Total White Black Hispanic Under or older Married Divorced Widowed Single NOTE: Total household income for couples is split equally between husbands and wives to estimate income for married beneficiaries.

5 Exhibit 4 Median per capita income of Medicare beneficiaries, by age and race/ethnicity, 2014 White Black Hispanic $33,805 $27,540 $18,977 $13,708 $12,972 $18,700 $13,843 $16,767 $12,013 $20,241 $14,617 $10,878 Under Age 65 Ages Ages Ages 85 and Older NOTE: Beneficiaries identified as other races not shown separately.

6 Exhibit 5 Median per capita income of Medicare beneficiaries, by education level and race/ethnicity, 2014 White Black Hispanic $16,460 $12,178 $10,084 $23,641 $15,402 $14,160 $30,963 $19,551 $19,352 $43,603 $32,096 $26,156 Less than High School High School Graduate Some College College Graduate NOTE: Beneficiaries identified as other races not shown separately.

7 Exhibit 6 Projected growth in per capita income among Medicare beneficiaries, In 2014 dollars $120, th percentile $113,650 $100,000 $80,000 $93,000 $69, th percentile $84,600 $60,000 $42, th percentile $51,550 $40,000 $24,150 50th percentile (Median) $28,450 $20,000 $0 $14, th percentile $16, Year NOTE: All incomes are adjusted to 2014 dollars.

8 Exhibit 7 Share of beneficiaries with savings, by race/ethnicity, 2014 No savings Share of all Medicare beneficiaries with no savings = 8% White Black Hispanic 5% No savings 20% No savings 24% Share with savings 95% Share with savings 80% Share with savings 76% 41.1 million beneficiaries 5.5 million beneficiaries 5.1 million beneficiaries NOTE: Beneficiaries identified as other races not shown separately.

9 Exhibit 8 Distribution of savings among Medicare beneficiaries, % had savings above $3,585,350 5% had savings above $1,219,250 50% had savings below $63,350 25% had savings below $11,900 8% had $0 in savings or were in debt

10 Exhibit 9 Median per capita savings of Medicare beneficiaries, overall and by selected characteristics, 2014 Race/ethnicity Age Marital Status $91,950 $95,300 $86,150 $63,350 $68,150 $29,500 $30,700 $51,250 $44,950 $20,950 $12,350 $9,800 Total White Black Hispanic Under or older Married Divorced Widowed Single NOTE: Total household savings for couples is split equally between husbands and wives to estimate savings for married beneficiaries.

11 Exhibit 10 Median per capita savings of Medicare beneficiaries, by federal poverty level and race/ethnicity, 2014 $251,169 White Black Hispanic Federal Poverty Level $19,645 $4,049 $3,367 $74,765 $20,937 $17,940 $82,223 $58,954 Less than 200% FPL 200% - 400% FPL More than 400% FPL NOTE: Beneficiaries identified as other races not shown separately.

12 Exhibit 11 Median per capita savings of Medicare beneficiaries, by education level and race/ethnicity, 2014 White Black Hispanic $269,670 $19,466 $3,545 $2,952 $64,413 $11,796 $11,791 $109,414 $33,244 $24,111 $63,810 $62,452 Education Level Less than High School High School Graduate Some College College Graduate NOTE: Beneficiaries identified as other races not shown separately.

13 Exhibit 12 Projected growth in per capita savings among Medicare beneficiaries, In 2014 dollars $1,800,000 $1,600, th percentile $1,570,600 $1,400,000 $1,200,000 $1,219,250 $1,000, th percentile $921,750 $800,000 $670,900 $600,000 $400,000 $242, th percentile $357,250 $200,000 $63,350 50th percentile (Median) $102,800 $ Year NOTE: All savings are adjusted to 2014 dollars.

14 Exhibit 13 Share of beneficiaries with home equity, by race/ethnicity, 2014 Share of all Medicare beneficiaries with no home equity = 24% White Black Hispanic No home equity 18% Share with home equity 82% No home equity 43% Share with home equity 57% No home equity 48% Share with home equity 52% 41.1 million beneficiaries 5.5 million beneficiaries 5.1 million beneficiaries NOTE: Beneficiaries identified as other races not shown separately.

15 Exhibit 14 Distribution of home equity among Medicare beneficiaries, % had home equity above $773,550 5% had home equity above $418,400 50% had home equity below $65,500 25% had home equity below $5,200 24% had $0 in home equity

16 Exhibit 15 Median per capita home equity of Medicare beneficiaries, overall and by selected characteristics, 2014 Race/ethnicity Age Marital Status $115,400 $83,700 $80,850 $80,700 $79,600 $65,500 $69,550 $24,450 $13,300 $8,200 $13,100 $- Total White Black Hispanic Under or older Married Divorced Widowed Single NOTE: Total household home equity for couples is split equally between spouses to estimate home equity for married beneficiaries.

17 Exhibit 16 Median per capita home equity of Medicare homeowners, by federal poverty level and race/ethnicity, 2014 $130,630 White Black Hispanic $83,964 $49,556 $46,341 $96,090 $62,980 $49,123 $97,230 $72,392 Federal Poverty Level Less than 200% FPL 200% - 400% FPL More than 400% FPL NOTE: Beneficiaries identified as other races not shown separately.

18 Exhibit 17 Median per capita home equity of Medicare homeowners, by education level and race/ethnicity, 2014 White Black Hispanic $70,840 $50,496 $43,286 $96,279 $64,859 $51,401 $109,896 $77,880 $60,236 $158,393 $100,566 $85,569 Education Level Less than High School High School Graduate Some College College Graduate NOTE: Beneficiaries identified as other races not shown separately.

19 Exhibit 18 Projected growth in per capita home equity among Medicare beneficiaries, In 2014 dollars $700,000 $600, th percentile $580,400 $500,000 $400,000 $418, th percentile $385,500 $300,000 $200,000 $298,050 $157, th percentile $184,250 $100,000 $65,500 50th percentile (Median) $70,900 $ Year NOTE: All home equity amounts are adjusted to 2014 dollars.

20 Exhibit 19 Key Takeaways Most people on Medicare are of modest means, and half lived on less than $24,150 in 2014 A small share have high incomes Most people on Medicare have some savings and home equity, but the range of assets among beneficiaries is wide Half of all Medicare beneficiaries have less than $63,350 savings Half of all Medicare beneficiaries have less than $65,500 in home equity Income and assets are projected to be somewhat greater among the next generation Much of the growth is projected to be realized among the upper income and asset levels Median income and assets expected to rise, but only modestly