High percentage of older Americans spending more than budget allows

Posted on: Friday, February 22, 2013

A new study indicates that more than one-tenth of American households spend a great deal more than they take in.

According to a recent report produced by the Employee Benefit Research Institute, elderly American households are generally thrifty with how they spend. Data shows that 60 percent of them spend less than what they make, whether it's from a job or an investment. However, in approximately one in every five cases, elderly consumers withdraw more than their means allow.

Sudipto Banerjee, research associate author of the report, indicated that far too many people are spending when they're already in the red. And those who do are frequently those who can least afford it.

"Those with an income shortfall are far more likely to be low-income, low-asset households, and they spend down their liquid assets at a faster rate than households that do not have an income shortfall," said Banerjee.

The report's results are based on data accumulated in 2009, where more than 14 percent of households whose homeowners were 65 spent a great deal more than they earned - 175 percent more. Meanwhile, nearly 20 percent outspent their financial reserves by 50 percent or more.

This may explain why many lawmakers in Washington are hesitant to raise the eligibility age for insurance customers on Medicare. During a recent press briefing, White House press secretary Jay Carney said that any attempts to raise the Medicare eligibility age from 65 to 67 were off the table, speaking on behalf of President Barack Obama.

"The president's made clear that we don't believe that that's the right policy to take," said Carney, according to Reuters.

Posted In: Insurance News, Health Insurance

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