The 2016 New Jersey Elder Economic Security Standard Index EESSI 2016 - 0118.pdfThe 2016 New Jersey Elder Economic Security Standard™ Index Page ii The New Jersey Department of Human

The 2016 New Jersey

Elder Economic Security Standard™

Index

January 2018State of New Jersey

Department of Human ServicesDivision of Aging Services

Center for Social and Demographic Research on AgingGerontology Institute

John W. McCormack Graduate School of Policy & Global StudiesUniversity of Massachusetts Boston

The 2016 New Jersey Elder Economic Security Standard™ Index Page ii

The New Jersey Department of Human Services (NJ DHS) complies with applicable Federal civil rights laws and does not discriminate on the basis of race, color, national origin, age, disability, or sex. NJ DHS does not exclude people or treat them differently because of race, color, national origin, age, disability, or sex. The NJ DHS provides free aids and services to people with disabilities to communicate effectively with us, such as:

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Written information in other formats (large print, audio, accessible electronic formats, other formats)

Free language services to people whose primary language is not English, such as qualified interpreters

Information written in other languages If you need these services, contact Bonny E. Fraser, Esq., or if you believe that the NJ DHS has failed to provide these services or discriminated in another way on the basis of race, color, national origin, age, disability, or sex, you can file a grievance at: 222 South Warren Street, PO. Box 700, Trenton, New Jersey 08625‐0700; phone: 609‐777‐2026; fax: 609‐633‐9610; [email protected]. You can also file a civil rights complaint with the U.S. Department of Health and Human Services, Office for Civil Rights, electronically through the Office for Civil Rights Complaint Portal, available at https://ocrportal.hhs.gov/ocr/smartscreen/main.jsf, or by mail or phone at: U.S. Department of Health and Human Services, 200 Independence Avenue, SW, Room 509F, HHH Building, Washington, D.C. 20201; phone 800‐368‐1019, 800‐537‐7697 (TDD). Complaint forms are available at https://www.hhs.gov/ocr/filing‐with‐ocr/index.html.

The 2016 New Jersey Elder Economic Security Standard™ Index Page iii

THEELDERECONOMICSECURITYSTANDARD™INDEXTheElderEconomicSecurityStandardTMIndex(theElderIndex)isatoolforusebypolicymakers,olderadults,familycaregivers,serviceproviders,agingadvocatesandthepublicatlarge. Developed by the Gerontology Institute at theUniversity ofMassachusetts BostonandWiderOpportunities forWomen(WOW), theElder Index isageographicallyspecificmeasure of income that older adults require to maintain their independence in thecommunity and meet their daily costs of living, including affordable and appropriatehousingandhealthcare.This isthesecondstatewidereportproducedbytheNewJerseyDepartmentofHumanServices,DivisionofAgingServices. ThreepreviousreportswereproducedwiththesupportoftheNewJerseyFoundationforAging.TheinformationdevelopedthroughtheElderIndexhelpsusunderstandthatmanyolderadultswhoarenotpoor,asdefinedbytheofficialpoverty level,stilldonothaveenoughincometomeet theirbasicneeds.TheElder Indexhelpsanswer the followingquestions:Howmuch income—orcombinationofpersonal incomeandpublicprograms—isneededby older adults living on fixed incomes to cover today’s rising living costs?What is theimpactofpublicprograms,suchasMedicare,Medicaid,orhousingassistance,onanelder’sevolvingabilitytomeethisorhershelterandhealthneeds?Howdoestheneedforlong‐termservicesandsupportsaffecteconomicsecurity?Members of the Gerontology Institute primarily responsible for this report are Jan E.Mutchler, Ping Xu and Yang Li. We acknowledge the contributions of Laura Russell indeveloping thecoremethodologyused in theElder Index,EllenBruce forher leadershipandinsightsoneldereconomicsecurity,andJudithConahanforherworkdevelopingthelong‐termcarecostcomponentof theElder Index.Wealso thankWOWandGerontologyInstitutestaffmemberswhoparticipatedindevelopingpreviousstate‐levelreportsontheElder Index upon which the current report is based, including ShawnMcMahon, AlisonGottlieband JiyoungLyu.Theauthors, of course, are responsible for the contentsof thisreportandacceptresponsibilityforanyerrorsoromissions.

The 2016 New Jersey Elder Economic Security StandardTM Index Page 4

Table of Contents

Executive Summary ............................................................................................................... 5

Introduction ............................................................................................................................ 8

The Statewide New Jersey Elder Economic Security Standard Index .............................. 8

Calculating the Elder Economic Security Standard Index ............................................... 15

The 2016 Elder Economic Security Standard Index for New Jersey ............................... 19

Summary of Findings for Mercer County .........................................................................................21

Summary of Findings for Essex County ...........................................................................................23

Summary of Findings for Ocean County ..........................................................................................25

The Impact of Home and Community-Based Long-Term Services and Supports ......... 26

The Increased Cost of Getting By in New Jersey .............................................................. 31

Conclusion ........................................................................................................................... 32

References............................................................................................................................ 33

Appendix A: Data Sources .................................................................................................. 34

Appendix B: Elder Economic Security Standard Index for New Jersey Counties and Selected Other Areas, 2016 ................................................................................................. 35


The2016NewJerseyElderEconomicSecurityStandardTMIndex

ExecutiveSummaryManyNewJerseyeldersage65andoverstruggletomakeendsmeet.Livingcostsarehigh,especiallyforhousingandhealthcare.Inthefaceofrisingexpenses,manyeldersreceiveatmost a modest cost of living adjustment each year; thus, they are spending downretirement savings or face growing debt. At the same time, older people strain to bepreparedforthepresentbutfaceachallengingfutureiftheirlifecircumstanceschangeduetoillness,lossofaspouseorpartner,orgrowingneedsforhelpwithdailytasks.The 2016 Elder Index for New Jersey was tabulated using a national methodologydeveloped by the University of Massachusetts Boston Gerontology Institute (GI) incollaborationwithWiderOpportunitiesforWomen(WOW).TheElderIndexmeasurestheliving expense costs for older adults in today’s economy and helps us answer keyquestions:What is an adequate income for older adults inNew Jersey to “age in place”?Howdo financialneedsvaryaccording to the lifecircumstancesofelders—whether theylivealoneorwitha spouseorpartner, rentorown theirhome?Howdo livingexpenseschangeashealthstatusandlifecircumstanceschange?Whathappensifeldersneedlong‐termservicestoremainathome?Inaddressingthesequestions,theElderIndexpresentedin this reportmay be used to increase public awareness and inform public policies andprogramsmeanttosupportolderadultsastheyageintheircommunities.AFrameworkforMeasuringEconomicSecurityforEldersTheElderEconomic Security StandardTM Index (Elder Index) is ameasure of the cost ofbasicexpensesofelderhouseholds(thoseexclusivelyincludingmembersage65orolder)toageinplace,continuingtoliveinthecommunitysettingoftheirchoice.TheElderIndexdefineseconomicsecurityasthefinancialstatuswhereeldershavesufficientincome(fromSocial Security, pension, retirement savings, and other sources) to cover basic andnecessarylivingexpenses.ItdemonstratestheinterplaybetweenNewJerseyelders’livingexpenses and actual income.TheElder Index also illustrateshowelders’ living expenseschangewhentheirlifecircumstanceschange.This report presents the Elder Index for New Jersey to benchmark basic living expensecosts for elder households. It illustrates how expenses vary both by specificNew Jerseygeographicareasandbythecircumstancesofelderhouseholds, includinghouseholdsize,homeowner or renter status, health status, and the need for long‐term services andsupports.Theexpensesarebasedonmarketcostsanddonotassumeanypublicorprivatesupports.


KeyFindingsforNewJersey

1. New Jerseyelderscannotmeettheirbasic livingexpenseswhetherthey liveattheFederalPovertyLevelortheleveloftheaverageSocialSecuritybenefit.Thisistrueofeldersstatewide,whethertheyrentorownahome.

o EightpercentofNewJersey’solderadultsliveatorbelowthefederalpovertylevel.

o SocialSecurityistheonlysourceofincomefor30%ofolderadultsinNewJersey.

o Expensesvarywidelyacrosstypesofcommunities.Forexample,elderhomeownerswithnomortgagewho livealone inOceanCountyneed$23,472peryeartocoverbasiclivingexpenses.Incontrast,elderrenterslivingaloneinBergenCountyneedasmuchas$30,984tocoverbasicexpenses.Thestatewideaverageforsingleolderadults is$27,696 foranownerwithnomortgage,$29,016 forasinglerenter,and$41,016foranownerwithamortgage.

o Elder coupleswhoown a homewithnomortgage and live inOceanCountyneed

$34,860 per year to cover basic living expenses. In contrast, couples who own ahomewithamortgage living inBergenCountyneedasmuchas$58,584 to coverbasic expenses. The statewide average for an older couple is $38,952 for ownerswith nomortgage, $40,272 for coupleswho rent, and $52,272 for ownerswith amortgage.

2.Housingcosts(mortgageorrent,taxes,utilitiesandinsurance)putaheavyburdenonsomeelderhouseholds,representingasmuchashalfoftheirtotalexpenses.

TheElderIndexreflectsawidevariationinhousingcostsdependingonwhetherolderadultsownorrent,andbycounty.Olderhomeownerswithoutamortgagetypically have the lowest housing costs (although rents are lower in threecounties)whilehomeownersstillpayingamortgage typicallyhave thehighesthousingcosts.

The monthly housing costs for elder homeowners without a mortgage rangefrom a low of $682 permonth in Cumberland County to a high of $1,264 permonthinEssexCounty.

Themonthly housing costs for older adults paying fairmarket rent for a one‐bedroomapartmentrangefromalowof$819permonthinCapeMayCountytoahighof$1,243permonthinBergenandPassaicCounties.

Themonthlyhousingcostsforelderhomeownerswithamortgagerangefromalowof$1,331permonthinCumberlandCountytoahighof$2,594permonthinBergenCounty.


3.TheElderIndexshowsthesignificanceofhealthcarecostsforNewJerseyelderswhomust purchase supplemental health and prescription drug coverage in addition toMedicare.

TheElderIndexincludespremiumcostsofsupplementalhealthandprescriptiondrug coverage to Medicare, which provide critical protection against highmedicalandprescriptiondrugcosts.

Older adults inNew Jerseywho are in good health face combined health carecosts (insurance premiums plus co‐pays, deductibles, fees, and other out‐of‐pocketexpenses)of$465permonthtohaveprotectionagainsthighmedicalandprescriptiondrugcosts.

Retiredcouplesareunabletopurchasesupplementalhealthinsurancethrougha“family plan”; rather, they must each buy coverage as an individual. Thus,combined health care costs are doubled for elder couples, totaling $930 permonth.

4.Evenelderswhoarecurrentlymakingendsmeetfaceanuncertainfutureiftheirlifecircumstanceschange,suchaslossofaspouse/partneroradeclineinhealthstatus.

Anelderpayingmarket rate rent inNew Jerseyhasexpenses reducedbyonly28%when a spouse dies, yet his or her incomemix of Social Security and/orpensionincomemaydecreasesubstantially.

Olderadultsoftenfaceariseinhealthcareexpenseswhentheirhealthdeclines.Whileaddingsupplementalhealthandprescriptiondrugcoverage toMedicareprovidesprotectionagainstunanticipatedhealthcareexpenses,averageout‐of‐pocket expenses rise from $465/month for an individual in good health to$627/monthforanindividualinpoorhealth.

5.Theneedforhomeandcommunity‐basedlong‐termservicesandsupportscanmorethandoublean elder’s expenses, significantly increasing the incomeneeded tomeetbasicneeds.

Theneedforhomeandcommunity‐basedlong‐termservicesandsupportsaddssubstantially to anelder’s expenses.Addinga low level of care foronepersonadds$8,724peryearto livingcosts foranolderadult innorthernNewJersey.Requiringamediumlevelofcareadds$22,827andneedingahighlevelofcareadds$39,095‐$47,207.

As a comparison, national market surveys report an average annual rate of$118,625fornursingfacilitycare(semi‐privateroom)inNewJersey.


IntroductionThis report addresses income adequacy forNew Jersey’s older adults using the nationalElder Economic Security Standard™ Index (Elder Index) methodology. The Elder Indexbenchmarks basic costs of living for elder households and illustrates how costs of livingvary geographically and based on the characteristics of elder households, includinghouseholdsize,housingtenure,andhealthstatus.Thecostsarebasedonmarketcostsforbasicneedsofelderhouseholdsanddonotassumeanypublicorprivatesupports.The Elder Index presented in this reportmay be used to increasepublic awareness andinformpublicpoliciesandprograms.TheElderIndexoffers:

Informationtoillustratethebasicexpensesthatolderadultsfaceandhowchangesintheir lifecircumstancesaffecttheirfinancialsecurity. Commonchanges includethe need for long‐term services and supports,which dramatically increases livingexpenses, or the death of a spouse, which often greatly reduces income withoutsubstantiallydecreasinglivingcosts.

Aframeworkforanalyzingtheeffectsofpublicpolicyandpolicyproposalsinsuchareasasretirementsecurity,healthcareandlong‐termservices,taxes,andhousing.

An educational tool to inform elders about actual and projected living costs toinformtheirfinancial,employment,andlifedecisions.

AccordingtotheU.S.CensusBureau’spopulationestimatesfor2016,15.3%ofNewJerseyresidentswere65 years or older, and13.4%werebetween the agesof 55‐64,poised todramatically increase elders’ numbers as the “baby boomers” age.1 The individualcircumstances of New Jersey elders vary from those who are healthy and economicallysecure, to thosewho are poor, ill, or livingwith substantial disability. Elders’ situationsvarygreatlyintermsoffamilysupport,neighborhoodnetworks,andcommunityandsocialconnections. New Jersey elders also differ according to their housing situation, healthstatus,andneedforlong‐termservicesandsupports.Manyofthesecharacteristicschangeover an elder’s life span. The Elder Index shows how seniors may be prepared for thepresentyetfaceaprecariousfutureaslivingexpensesrisebecauseofsituationalchanges.TheStatewideNewJerseyElderEconomicSecurityStandardTMIndex

1. Forelderslivingaloneandingoodhealth,thestatewideNewJerseyElderEconomicSecurity StandardTM Index for 2016 is $27,696 (for homeowners without amortgage), $29,016 (for renters) and$41,016 (forhomeownerswith amortgage)(see Table 1). This represents the living expense costs (housing, health care,transportation,foodandmiscellaneous)forsingleeldersage65+inNewJersey.TheElderIndexismuchhigherthanothercommonlyusedincomebenchmarks.

1 Source:2016PopulationEstimatesprogramoftheU.S.CensusBureau.Seehttps://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=PEP_2016_PEPAGESEX&prodType=table


Thefederalpovertyguideline,whichisaformulameasuringincomeinadequacythatisbasedsolelyonfoodcosts,is$11,880peryearforanindividual. Thisisonly43%ofthestatewideElderIndexforhomeownerswithnomortgage,41%ofthestatewideElderIndexforrenters,and29%ofthestatewideElderIndexforhomeownerswhohaveamortgage.

TheaverageSocialSecuritybenefitforNewJerseyeldersis$18,065peryearforan individual retiredworker.This representsonly65%of the statewideElderIndexforhomeownerswithnomortgage,62%ofthestatewideElderIndexforrenters, and 44% of the statewide Elder Index for homeowners who have amortgage.

Table1

TheStatewideElderEconomicSecurityStandardTMIndexforNewJersey,2016

ElderLivingAlone Two‐personElderHousehold

MonthlyExpensesOwnerwithoutMortgage

RenterOwnerwith

Mortgage

OwnerwithoutMortgage

RenterOwnerwith

MortgageHousing $1,012 $1,122 $2,122 $1,012 $1,122 $2,122Food $256 $256 $256 $470 $470 $470Transportation $190 $190 $190 $293 $293 $293HealthCare(GoodHealth) $465 $465 $465 $930 $930 $930

Miscellaneous $385 $385 $385 $541 $541 $541TotalMonthly(Index)Expenses $2,308 $2,418 $3,418 $3,246 $3,356 $4,356

TotalAnnual(Index)Expenses

$27,696 $29,016 $41,016 $38,952 $40,272 $52,272

2. For twoelders living togetherand ingoodhealth, thestatewideNew JerseyElder

Economic Security StandardTM Index is $38,952 (for homeowners without amortgage),$40,272(forrenters),and$52,272(forhomeownerswithamortgage).Thisrepresentsthelivingexpensecosts(housing,healthcare,transportation,foodandmiscellaneous)forhouseholdsincludingtwoeldersage65+inNewJersey.TheElderIndexismuchhigherthanothercommonlyusedincomebenchmarks. The federal poverty guideline is $16,020 per year for elder two‐person

households.Thisisonly41%ofthestatewideElderIndexforhomeownerswithno mortgage, 40% of the statewide Elder Index for renters, and 31% of thestatewideElderIndexforhomeownerswhohaveamortgage.

The average Social Security benefit for New Jersey couples is estimated to be$29,798peryear.Thisrepresentsonly77%oftheElderIndexforhomeownerswithnomortgage,74%oftheElderIndexforrenters,and57%ofthestatewideElderIndexforhomeownerswhohaveamortgage.


ComparisontoOtherBenchmarksofIncomeOne‐PersonHouseholdFederal Poverty Guidelines: As illustrated in Figure 1, the average after‐tax incomerequiredby an elder living alone inNew Jersey is 2.3 to3.5 times ashighas theofficialpovertyguideline.In2016,underthefederalpovertyguidelineasingleadulthouseholdis“poor” only if he or she has amonthly income of $990 ($11,880 per year) or less. Thefederalpovertyguideline(notthefederalpovertythreshold)isusedasthebasisformostincomeeligibilityguidelinesforpublicsupportprograms.Average Social SecurityBenefit: The average Social Security benefit in New Jersey in2016, at $1,505 permonth ($18,065 per year), is higher than thepoverty guideline, butwellbelowtheElderIndexforownerswithoutamortgage,furtherbelowtheElderIndexforolderadultspayingmarketraterents,andevenfurtherbelow(lessthanhalf)theElderIndexforownerswhohaveamortgage.WhileSocialSecuritywasneverintendedtobethesolesourceofincomeforelders,inrealityitistheonlyincomefor30%ofNewJerseyelders.2

Figure1

TheElderIndexComparedtoOtherBenchmarks,2016ElderIndexforOne‐PersonElderHouseholdsinNewJersey

2 Source:AARP.(2014).SocialSecurity:2014NewJerseyQuickFacts.Retrievedfromhttp://www.aarp.org/content/dam/aarp/research/surveys_statistics/general/2014/ssqf/Social‐Security‐2014‐New‐Jersey‐Quick‐Facts‐AARP‐res‐gen.pdf

$11,880

$18,065

$27,696 $29,016

$41,016

FederalPovertyGuideline

Avg.SocialSecurityBenefitfor

retiredworker,NJ

EstimatedStatewide

Index(ownerw/omortgage,goodhealth)

EstimatedStatewide

Index(renter,goodhealth)

EstimatedStatewide

Index(ownerwithmortgage,goodhealth)


Two‐PersonElderHouseholdsFederal Poverty Guidelines: As illustrated in Figure 2, the average after‐tax incomerequired by a two‐person elder household in New Jersey is 2.4 to 3.3 times the officialpoverty guideline. In2016,under the federalpoverty guidelinea two‐adulthousehold ispoorifithasamonthlyincomeof$1,335($16,020peryear).Average Social Security Benefit: The estimated average Social Security benefit for aneldercoupleinNewJerseyin2016,at$2,483permonth($29,798peryear),isbelowtheElderIndexforhomeownercoupleswithoutamortgage,furtherbelowtheElderIndexforelder couples renting at market rates, and just 57% of the value of the Elder Index forownerswhohaveamortgage.

Figure2TheElderIndexComparedtoOtherBenchmarks,2016

ElderIndexforTwo‐PersonElderHouseholdsinNewJersey

IncomePatternsamongNewJersey’sHouseholdsHouseholdincomelevelsvarybyageandlifecircumstance.Typically,medianincomelevelsrisewithageuntilmid‐lifeandthendeclinewithadvancingage,asindicatedinFigure3.InNewJersey,medianhouseholdincomeforhouseholders65yearsandover3,at$45,338in

3 A“householder”isthepersoninwhosenamethehomeisownedorrented.Householdincomeincludestheincomeofthehouseholderplusallotherindividualslivinginthesamehome.

$16,020

$29,798

$38,952 $40,272

$52,272

FederalPovertyGuideline

Avg.SocialSecurityBenefitforretiredcouple,NJ

EstimatedStatewideIndex(ownerw/o

mortgage,goodhealth)

EstimatedStatewideIndex(renter,good

health)

EstimatedStatewideIndex(ownerwith

mortgage,goodhealth)


2015, was just over half the median household income of householders in their “peakearning”yearsof45‐64,at$88,616.

Figure3NewJerseyMedianHouseholdIncomebyAgeofHouseholder,2015

Source:U.S.CensusBureau,AmericanCommunitySurvey2011‐2015,TableB19049

According to the federal poverty threshold and the most current American CommunitySurveydata,anestimated8%ofNewJersey’selderswereconsidered“poor”in2015,andasimilarshareofNewJerseyseniorswasjustabovethepovertythreshold.Afull16%wereestimatedtohaveincomesatorbelow150%ofthepovertythreshold.4Povertyratesforolderwomenareconsiderablyhigherthanforoldermen,9%(women)versus6%(men).Moreover,poorolderhouseholdsaredisproportionatelyheadedbywomen.In2015,65%ofolderhouseholdsinNewJerseywithincomesbelowthepovertylevelwereheadedbyawidowedornon‐marriedwoman.5Reasonsforhigherpovertyratesamongwomenincludelowerwages, lower lifetime earnings, and less time in theworkforce.Women also havelonger life expectancies but more chronic illness, and are more likely than men toexperiencelossofincomewhenwidowed.

4Calculated fromTablesB17001andB17024,2011‐2015AmericanCommunitySurvey5‐yearestimates. In2015, thepoverty threshold for anolder individual living alonewas$11,367; itwas $14,342 for a two‐seniorhousehold. Olderindividualslivingalonewerebelow150%ofthethresholdiftheyhadincomeoflessthan$17,051annually;two‐personhouseholdswerebelow150%ofthethresholdiftheyhadincomeoflessthan$21,513annually.5EstimatedusingtableB17017,2011‐2015AmericanCommunitySurvey5‐yearestimates.

$32,553

$77,539

$88,616

$45,338

Householderunderage25

Householderage25to44

Householderage45to64

Householderage65+


Thisreportfocusesonthechallengesofmeetingexpensesfor low‐andmoderate‐incomeolderadults.Figure4showsthatin2015,28%ofNewJerseyhouseholdsheadedbyadultsaged 65 or older had incomes under $25,000; over half had incomes under $50,000(representing the two lower income categories combined). In contrast, only 28% ofhouseholds headed by an individual age 45‐64 had incomes below $50,000, highlightingsubstantial incomedisparities between senior andmiddle‐agedhouseholds. Householdsheaded by those 65 and over have substantially lower income due in large part to lessemploymentincome;olderhouseholdsalsoincludefewermembersonaverage.

Figure4NewJerseyHouseholdIncomeDistributionsbyAge,2015

Source:U.S.CensusBureau,AmericanCommunitySurvey2011‐2015,TableB19037

TheFederalPovertyThresholdThe poverty thresholds are drawn from the original version of the federal povertymeasure.6Thepovertythresholdswerefirstcalculatedinthe1960’sbytakingthecostoffood needed to meet the minimum nutritional needs of adults of different ages, andmultiplyingthisbythree.Thisfigurewasthenusedasthereferencepointfortheamountof income needed to live at a basic level. This calculation was based on consumptionsurveys conducted in the late 1950s showing that U.S. families spent about one‐third of

6ThefederalpovertythresholdsweredevelopedbyMollieOrshanskyoftheSocialSecurityAdministrationin1963‐64andareupdatedeachyearbytheU.S.CensusBureau.Formoreinformationonthefederalpovertymeasures,seehttps://aspe.hhs.gov/history‐poverty‐thresholds.

13%

28%

15%

26%[VALUE]

26%

44%

20%

Householderage45‐64 Householderage65+

Under$25,000 $25,000‐$49,999 $50,000‐$99,999 $100,000ormore


theirincomesonfood.Sincethattime,thethresholdsareupdatedeachyearbythechangeintheconsumerpriceindex(CPI).Despitethishistoricalcalculation’srelianceonanoutdatedconnectiontohouseholds’foodcostsalone,thepovertythresholdscontinuetobeusedasthebasistoestimatethenumberofAmericans living inpovertyeachyear. Inaddition, theU.S.DepartmentofAgriculturecalculationsassumethatolderadultshavelowercaloricrequirementsthanyoungeradults.Asaresult, theofficialU.S.povertythresholdsare lower foradults65andolderthanforyoungeradults.Thefederalpovertythresholdsdonotconsideragevariabilityinanyothercosts–e.g.,housing,healthcare,transportationorlong‐termservicesandsupports.Figure5comparestheUSpovertythresholdsbyageforone‐andtwo‐personhouseholds.Thepovertycutoffforelderslivingaloneis$975peryearlessthanthecutoffforyoungeradults, and the poverty cutoff for elder two‐person households is $1,565 less than thecutoffforyoungercouples.7

Figure5ComparisonofUSPovertyThresholdsbyAge,2016

Source:U.S.CensusBureau,https://www.census.gov/data/tables/time‐series/demo/income‐poverty/historical‐poverty‐thresholds.html

As indicated, the federal povertymeasure’smethodology is based on outdated spendingpatternsandassumeshouseholdsspendafixedratioofone‐thirdoftheirincomesonfood.Inaddition,itdoesnotallowfordifferentratesofinflationfordifferentlivingexpenses;for

7Thepovertyguidelinesareasecondversionofthefederalpovertymeasure.IssuedeachyearintheFederalRegisterbytheDepartmentofHealthandHumanServices,theyareasimplificationofthepovertythresholdsforadministrativeuses,suchasdeterminingeligibilityforcertainfederalprograms.Thefederalpovertyguidelinesfor2016are$11,880forone‐personhouseholdsand$16,020fortwo‐personhouseholds,anddonotdifferbyageofhouseholder.Theyarethesamein48statesandadjustedforlivingcostsonlyinAlaskaandHawaii.

$12,486

$16,072

$11,511

$14,507

1‐PersonHHS 2‐PersonHHS

PovertyThresholds:<65 PovertyThresholds:>65


example,healthcareandhousingcostshaverisenmuchmore than foodcosts.Finally, itdoesnotreflectregionalvariationsinlivingcosts.8DefiningtheElderIndex:AFrameworkforEconomicSecurityforEldersIncontrasttothepovertythreshold,theElderIndexisameasureofthelivingexpensesforbasicneedsforelderhouseholdsto“ageinplace”intheirhomesorthecommunitysettingoftheirchoice.ThecostcomponentsandmethodologyfortheElderEconomicSecurityStandardTMIndexwere developed by researchers at the University ofMassachusetts in collaborationwithWiderOpportunitiesforWomen,andwithinputandguidancefromtheAdvisoryBoardforthenationalElderEconomicSecurityInitiative.TheElderIndexmethodologyisbasedonthe characteristics and spending patterns of elder households, reflecting a realisticmeasure of income adequacy as opposed to the original intent of the federal povertymeasure,whichwastoillustrateincomeinadequacy.Economicsecurityrequiresthateldershave sufficient income (from Social Security, pensions, retirement savings, and otherincome) tocover livingcosts.Using theElder Indexwecan illustrate thebasiccosts thateldersface,andtheinterplaybetweenlivingcostsandelders’incomeadequacy.Formoreinformation about the development and features of the Elder Economic SecurityStandardTM Index, seeCenter forSocialandDemographicResearchonAging(2017),andMutchler,Shih,Lyu,Bruce&Gottlieb(2015).CalculatingtheElderEconomicSecurityStandardTMIndexTheElderIndexusesdatafrompublicsourcesthatarecomparable,geographicallyspecific,easilyaccessible,andwidelyaccepted.Inareaswhereexistingpublicdatasourcesarenotcurrently available, theElder Indexuses a consistentmethodology toderive comparablemeasuresforcostswithinandacrossstates.The following represent some of the assumptions that are built into the Elder Index’smethodology.TheElderIndex:

measures basic living expenses for seniors living in the community (i.e., not innursinghomesorassistedlivingfacilities);

measures costs for elder households to live independently (vs. living inintergenerationalhouseholds);

measures living expenses for elders ages 65 and over to reflect the age atwhichMedicarebegins;

8FordiscussionofthelimitationsofthefederalpovertymeasuresandinformationontheSupplementalPovertyMeasuredevelopedinrecentyearsbytheU.S.CensusBureau,whichaddressessomeoftheseshortcomings,seeShort(2015).


includes Medicare because elders qualify for and receive it based on age andwithoutregardtoincomeandassets,makingMedicarenearlyauniversalprogram;9and

modelscostsforretiredelders,whonolongerhavework‐relatedexpensessuchaspayrolltaxesandcommutingtowork.

TheElder Index is tabulatedseparately forelders livingalone inone‐personhouseholds,andfortwo‐personhouseholds, includingjusttwomembers,bothofwhomareage65orolder.Alargemajority,butnotall,oftwo‐personelderhouseholdsaremarriedcouples.TheBigPicture:Elders’SpendingComparedtoAllHouseholdsFigure6 comparesthespendingbetweenelderhouseholdsandallhouseholds,basedondata fromtheConsumerExpenditureSurvey. For theNortheastregionasawhole,elderhouseholdsspendasimilarshareoftheirbudgetsonhousing,food,andtransportationasdoallhouseholds,butsubstantiallymoreonhealthcare. Allotherexpendituresaccountfor23%ofhouseholdspendingbytheaverageolderhousehold, less thanthepercentageforallhouseholdsintheNortheast(29%).

Figure6HouseholdSpendingasaPercentageofTotalBudget:Eldervs.AllHouseholdsinNortheast,2014‐2015

Source:U.S.DepartmentofLabor,BureauofLaborStatistics,ConsumerExpenditureSurvey2014‐2015,Tables1300and3850.

9AnindividualiseligibleforMedicareifheorshe(orhis/herspouse)workedforatleast10yearsinMedicare‐coveredemployment,is65yearsorolder,andisacitizenorpermanentresidentoftheUnitedStates(seehttps://www.cms.gov/medicare/eligibility‐and‐enrollment/origmedicarepartabeligenrol/index.html).Someindividuals,suchasrecentimmigrants,maynotqualifyforSocialSecurityorMedicare.

38% 35%

13%8%

12%12%

14%16%

23% 29%

0%

20%

40%

60%

80%

100%

Householderage65+ All‐agehouseholder

Housing Healthcare Food Transportation Other


IntroductiontoCostComponentsoftheElderIndexThebasic cost components developed for theElderEconomic Security StandardTM Indexincludehousing,food,healthcare,transportation,andmiscellaneousexpenses.Allcostsinthis report are expressed in2016dollars, and arederivedby inflating2015Elder IndexcomponentsbythecorrespondingCPI(seeAppendixAformoreinformation).Housing – includes housing (rent ormortgagepayment, if any), and related costs (heat,utilities, insurance,andproperty taxes) forelder rentersandelderowners,basedon thelatest available U.S. Census‐reported elder owner housing costs, and U.S. Department ofHousingandUrbanDevelopment(HUD)FairMarketRents.AsillustratedinFigure7,48%ofNewJerseyseniorhouseholdersowntheirhomeswithoutamortgage,24%arerenters,and28%arehomeownerswithamortgage.Food–representscostsoffoodpreparedathome,basedonUSDALow‐CostFoodPlanforolderadults,usingtheaverageoflow‐costfoodplanbudgetsforwomenandmen.10

Figure7

OwnerandRenterStatusofHouseholdersAge65andOverinNewJersey,2011‐2015

Source:U.S.CensusBureau,AmericanCommunitySurvey2011‐2015,TablesB25007andB25027

10AlthoughfoodexpenseslikelyvarysomewhatacrossgeographiclocalitiesinNewJersey,datatoadequatelyreflectthisvariabilityarenotavailable.

Renter,24%

Ownerwithmortage,28%

Ownerwithoutmortgage,48%


Health Care – includes premium costs for comprehensive supplemental coverage toMedicare. Costs include Medicare Part B and either Medicare Advantage, includingprescriptiondrugcoverage,orMedicareSupplementalInsurance(Medigap)plusMedicarePart D for prescription drug coverage. Calculations also include out‐of‐pocket costsincludingco‐pays,deductibles,andfeesforuncoveredexpenses.CalculationsarebasedondatafromtheMedicareOptionsComparewebsite.In calculating New Jersey health care costs, we assume coverage through MedicareAdvantageforthe2countieswithMedicareAdvantageenrollmentratesof20%ormore.WeassumecoveragethroughaMedicaresupplementalplan(Medigap)fortheremainingcounties.Costsareestimatedforpeopleingood,poor,andexcellenthealth.Tosimplifypresentation, theElder Index ispresented forelders ingoodhealth,which isthemost common health status as self‐reported by elders. In New Jersey, the statewideaveragemonthly health care cost for older adults in good health is $465 (or $5,580 peryear).Theestimatedout‐of‐pockethealth careexpenses for all three levelsofhealth arepresentedinTable2.

Table2EstimatedOut‐of‐PocketHealthCareExpenses,forThreeLevelsofHealth(Statewide

average)PerPerson: ExcellentHealth GoodHealth PoorHealth

CostPerMonth $429 $465 $627CostPerYear $5,148 $5,580 $7,524

Source:CalculatedbytheauthorsbasedondatafromtheMedicareOptionsCompareWebsite.

Transportation – uses automobile owner and operating costs from Internal RevenueService(IRS)mileagereimbursementrates,andelderautousagepatternsestimatedfromthemostrecentNationalHouseholdTravelSurvey(NHTS).Miscellaneous – represents all other goods, such as clothing, personal and householdneeds,andanyotherexpensesnotcapturedelsewhere.Basedonananalysisofthedetailedelder spending patterns from consumer spending data, the Elder Index estimatesmiscellaneous expenses at 20% of all other costs (excluding long‐term services andsupports) in each county for owners without a mortgage.11 This amount is calculatedseparatelyforolderindividualsandoldercouples,andappliedtoeachofthethreehousingscenarios.12

11 See U.S. BLS Consumer Expenditure Survey (http://www.bls.gov/cex/), and Social Security Administration,ExpendituresoftheAgedChartbook,2010,forrelateddata.12Notethat20%ofallothercostsequal16.67%oftotalexpenses.MiscellaneousexpensesincludeallexpendituresotherthanthosespecifiedelsewhereintheElderIndex.Withinhouseholdsizecategory,miscellaneousexpensesareestimatedbasedon thevalueof all other expenses forhomeownerswithout amortgage (the largest single segmentof theolderhouseholderpopulation).Thisstrategyisusedbecausemiscellaneousexpensesarenotlikelytovarydramaticallyacrosshousingtypes.


Elders’ living expenses in each of the above components are summed to determinehouseholdbudgetsforeachoftherespectivescenariosforelderhouseholds.ThisyieldstheElderEconomicSecurityStandardTMIndex, theafter‐tax incomerequiredtocoverelders’livingexpensesbasedonwheretheyliveandthecharacteristicsoftheirhouseholds.Costsofhomeandcommunity‐basedlong‐termservicesandsupports,forthosewhorequirethemtoremainintheirhome,arepresentedforservicepackagesalongthecontinuumofcare.Becausehomeandcommunity‐basedlong‐termservicesandsupportsarenotneededbyallelders,thesecostestimatesareprovidedasanadd‐oncomponenttothebasicElderIndex.Localpropertytaxesareincludedinthehousingcostcomponentforhomeowners,andNewJerseysalestax(7%during2016)isincludedinthemiscellaneouscategory.13A significant portion of Social Security income is exempt from federal income tax whenelders’combinedincomesareundercertainlimits.Incometaxtreatmentandratesvarybysource of income; elders typically rely on a combination of Social Security, pension, andsavings. Because most of the Elder Index household basic budgets are near the no‐taxlimits14,andbecausetaxratesvaryby incomesource,calculationsdonot includeincometaxesinthebasicmodel.The2016ElderEconomicSecurityStandardTMIndexforNewJerseyThe four components‒housing, food, health care, and transportation, plusmiscellaneousexpenses‒areadded together tocalculate theElder Index forNewJerseycounties.Thesecostsvaryaccordingtohouseholdsize(livingaloneorlivingwithanotheradultage65orolder)andhousingtenure(whetherthepersonisrentingahome,ownsahomeandisstillpayingamortgage,orownsahomeoutright).Informationisalsopresentedonthebudgetimpactofhealthstatus.ANoteonGeographicAreasData are tabulated for each of the 21 counties in New Jersey. The Elder Index is alsotabulatedforNewarkCity, fortheCamdenmetropolitanarea(whichincludesBurlington,CamdenandGloucestercounties),andfortheJerseyShoreregion(includingAtlantic,CapeMay,Middlesex,Monmouth,andOceancounties).Tables3,4,and5onthefollowingpagesillustratetheElderIndexforselectedelderhouseholdscenariosinthreecounties:MercerCounty,EssexCounty,andOceanCounty.The Elder Index values for all New Jersey counties plus the areas specified above arepresentedinAppendixB.

13StateofNewJersey,DepartmentoftheTreasury(http://www.state.nj.us/treasury/taxation/su_over.shtml)14Forasingleelder,SocialSecuritybenefitswillnotbetaxableunlessmodifiedadjustedgrossincome,plusone‐halfofSocialSecuritybenefits,exceeds$25,000.Foracouple,theno‐taxlimitis$32,000(https://www.irs.gov/uac/newsroom/are‐your‐social‐security‐benefits‐taxable)


Table3TheElderEconomicSecurityStandardTMIndexforMercerCounty,2016

ExpensesforSelectedHouseholdTypes


MonthlyExpensesOwnerwithoutMortgage

RenterOwnerwith

Mortgage


RenterOwnerwithMortgage

Housing $946 $1,071 $2,003 $946 $1,071 $2,003

Food $256 $256 $256 $470 $470 $470

Transportation $227 $227 $227 $352 $352 $352

HealthCare(GoodHealth) $476 $476 $476 $952 $952 $952

Miscellaneous $381 $381 $381 $544 $544 $544TotalMonthly(Index)Expenses $2,286 $2,411 $3,343 $3,264 $3,389 $4,321

TotalAnnual(Index)Expenses

$27,432 $28,932 $40,116 $39,168 $40,668 $51,852

ComparativeIncomeBenchmarksFederalPovertyGuideline(2016DHHS)

$11,880 $11,880 $11,880 $16,020 $16,020 $16,020

AverageSocialSecurityBenefitforMercerCounty,2016

$18,615 $18,615 $18,615 $30,706 $30,706 $30,706

FederalPovertyGuidelineasaPercentofIndex

43% 41% 30% 41% 39% 31%

AverageSocialSecurityBenefitasaPercentofIndex

68% 64% 46% 78% 76% 59%

EldersinMercerCountywithincomesatthefederalpovertylevel,oreveniflivingontheaverageSocialSecuritybenefitin2016,cannotaffordlivingexpenseswithoutpublicorprivatesupportsforhousingandhealthcare.

ImpactofChangeinHealthStatusonEstimatedHealthCareExpenses(changefromestimatedexpensesforgoodhealth)

PerPerson: PoorHealthIncreaseof:

ExcellentHealthDecreaseof:

ChangeinCostPerMonth $155 ‐$27

ChangeinCostPerYear $1,860 ‐$324


SummaryofFindingsforMercerCounty1. Elders inMercer County at the poverty level orwith the average Social Security

benefitcannotmakeendsmeet. TheaverageSocialSecuritybenefitprovidesanelderlivingaloneinMercerCounty

only46%‐68%oftheamountneededtocoverbasicexpenses. InMercerCounty,elderslivingaloneonanincomeequivalenttothefederalpoverty

guidelinecancoveronly30%‐43%oftheirbasiclivingexpenses. TheaverageSocialSecuritybenefitprovidesaneldercouplelivinginMercerCounty

only59%‐78%oftheamountneededtocoverbasicexpenses. InMercerCounty,twoelderslivingonanincomeequivalenttothefederalpoverty

guidelinecancoveronly31%‐41%oftheirbasiclivingexpenses.2. Elders living alone inMercer County need $27,432‐$40,116 to cover their basic

annuallivingcosts. ElderslivingaloneinMercerCountywhoowntheirhomewithoutamortgageneed

$27,432ayeartocovertheirbasiclivingexpenses. IfeldersrentanapartmentinMercerCounty,theirbasiclivingexpensesincreaseto

$28,932. Elders still paying a mortgage face housing costs more than double those for

homeownerswithoutamortgage,increasingannuallivingexpensesto$40,116. Elders with lower incomes need rent subsidies and/or elder affordable housing

units,aswellasassistancetocoversupplementalhealthplancosts.3. Eldercouples inMercerCountyneed$39,168‐$51,852 tocover theirbasicannual

livingcosts. Elder couples in Mercer County who own their home without a mortgage need

$39,168ayeartocovertheirbasiclivingexpenses. If elder couples rent an apartment inMercer County, their basic living expenses

increaseto$40,668. Eldercouplesstillpayingamortgagefacehousingcostsmorethandoublethosefor

homeownerswithoutamortgage,increasingannuallivingexpensesto$51,852. Elder coupleswith lower incomes need rent subsidies and/or affordable housing

units,aswellasassistancetocoversupplementalhealthplancosts.4. Someelderswhoarecurrentlymakingendsmeetfaceaprecariousfutureiftheir

life circumstances change, such as losing a spouse/partner or experiencing adeclineinhealthstatus. A member of an elder couple paying market rate rent in Mercer County has

expenses reduced by only 29%when a spouse or partner dies, from $40,668 to$28,932,yethisorherincomemaydecreasesubstantiallybasedonthemixofSocialSecurityand/orpensionincome.

EldersingoodhealthinMercerCountyfacehealthcarecostsof$476permonth–morethantheyspendonfood.Adeclineinhealthstatusresultsina$155monthlyincreaseinhealthcarecosts,adding$1,860annuallytotheelder’sexpenses.


Table4TheElderEconomicSecurityStandardTMIndexforEssexCounty,2016



MonthlyExpenses


RenterOwnerwith

Mortgage


RenterOwnerwith

MortgageHousing $1,264 $1,091 $2,549 $1,264 $1,091 $2,549

Food $256 $256 $256 $470 $470 $470

Transportation $185 $185 $185 $286 $286 $286HealthCare(GoodHealth)

$388 $388 $388 $776 $776 $776

Miscellaneous $419 $419 $419 $559 $559 $559TotalMonthly(Index)Expenses

$2,512 $2,339 $3,797 $3,355 $3,182 $4,640

TotalAnnual(Index)Expenses $30,144 $28,068 $45,564 $40,260 $38,184 $55,680


$11,880 $11,880 $11,880 $16,020 $16,020 $16,020

AverageSocialSecurityBenefitforEssexCounty,2016

$17,491 $17,491 $17,491 $28,851 $28,851 $28,851


39% 42% 26% 40% 42% 29%


58% 62% 38% 72% 76% 52%

Elders inEssexCounty,withincomesatthefederalpovertylevel,orevenif livingontheaverageSocialSecuritybenefitin2016,cannotaffordbasiclivingexpenseswithoutpublicorprivatesupportsforhousingandhealthcare.

ImpactofChangeinHealthStatusonEstimatedHealthCareExpenses(changefromestimatedexpensesforgoodhealth)

PerPerson: PoorHealthIncreaseof:



ChangeinCostPerYear $2,568 ‐$1,152


SummaryofFindingsforEssexCounty1. Elders in Essex County at the poverty level or with the average Social Security

benefitcannotmakeendsmeet. TheaverageSocialSecuritybenefitprovidesanelder livingalone inEssexCounty

only38%‐62%oftheamountneededtocoverbasicexpenses. InEssexCounty,elderslivingaloneonanincomeequivalenttothefederalpoverty

guidelinecancoveronly26%‐42%oftheirbasiclivingexpenses. TheaverageSocialSecuritybenefit inEssexCountyprovidesaneldercoupleonly

52%‐76%oftheamountneededtocoverbasicexpenses. InEssexCounty, twoelders livingonan incomeequivalent to the federalpoverty

guidelinecancoveronly29%‐42%oftheirbasiclivingexpenses.2. Elders living alone in Essex County need $28,068‐$45,564 to cover their basic

annuallivingcosts. ElderslivingaloneinEssexCountywhoowntheirhomewithoutamortgageneed

$30,144ayeartocovertheirbasiclivingexpenses. IfeldersrentanapartmentinEssexCounty,theirbasiclivingexpensesareslightly

less,at$28,068. Elders still paying a mortgage face housing costs that are double those for


units,aswellasassistancetocoversupplementalhealthplancosts.3. Elder couples in Essex County need $38,184‐$55,680 to cover their basic annual

livingcosts. Elder couples in Essex County who own their home without a mortgage need

$40,260ayeartocovertheirbasiclivingexpenses. Ifeldercouplesrentanapartment inEssexCounty, theirbasic livingexpensesare

slightlyless,at$38,184. Elder couples still payingamortgage facehousing costs that aredouble those for



life circumstances change, such as losing a spouse/partner or experiencing adeclineinhealthstatus. AmemberofaneldercouplepayingmarketraterentinEssexCountyhasexpenses

reducedbyonly26%whenaspouseorpartnerdies,from$38,184to$28,068,yethis or her incomemay decrease substantially based on themix of Social Securityand/orpensionincome.

Elders inEssexCountyfacehealthcarecostsof$388permonth–morethantheyspend on food. A decline in health status results in a $214 monthly increase inhealthcarecosts,adding$2,568annuallytotheelder’sexpenses.


Table5TheElderEconomicSecurityStandardTMIndexforOceanCounty,2016



MonthlyExpenses


RenterOwnerwith

Mortgage


RenterOwnerwith

MortgageHousing $713 $1,160 $1,539 $713 $1,160 $1,539

Food $256 $256 $256 $470 $470 $470

Transportation $185 $185 $185 $286 $286 $286HealthCare(GoodHealth)

$476 $476 $476 $952 $952 $952

Miscellaneous $326 $326 $326 $484 $484 $484TotalMonthly(Index)Expenses

$1,956 $2,403 $2,782 $2,905 $3,352 $3,731

TotalAnnual(Index)Expenses $23,472 $28,836 $33,384 $34,860 $40,224 $44,772


$11,880 $11,880 $11,880 $16,020 $16,020 $16,020

AverageSocialSecurityBenefitforOceanCounty,2016

$17,950 $17,950 $17,950 $29,609 $29,609 $29,609


51% 41% 36% 46% 40% 36%


76% 62% 54% 85% 74% 66%

EldersinOceanCountywithincomesatthefederalpovertylevel,oreveniflivingontheaverageSocialSecuritybenefit in2016,cannotafford livingexpenseswithoutpublicorprivatesupportsforhousingandhealthcare.

ImpactofChangeinHealthStatusonEstimatedHealthCareExpenses(changefromestimatedexpensesforGoodHealth)

PerPerson:PoorHealthIncreaseof:



ChangeinCostPerYear $1,860 ‐$324


SummaryofFindingsforOceanCounty1. Elders in Ocean County at the poverty level orwith the average Social Security

benefitcannotmakeendsmeet. TheaverageSocialSecuritybenefitprovidesanelderlivingaloneinOceanCounty

only54%‐76%oftheamountneededtocoverbasicexpenses. InOceanCounty,elderslivingaloneonanincomeequivalenttothefederalpoverty

guidelinecancoveronly36%‐51%oftheirbasiclivingexpenses. TheaverageSocialSecuritybenefitprovidesaneldercouplelivinginOceanCounty

only66%‐85%oftheamountneededtocoverbasicexpenses. InOceanCounty, twoelders livingonan incomeequivalent to the federalpoverty

guidelinecancoveronly36%‐46%oftheirbasiclivingexpenses.2. Elders living alone in Ocean County need $23,472‐$33,384 to cover their basic

annuallivingcosts. ElderslivingaloneinOceanCountywhoowntheirhomewithoutamortgageneed

$23,472ayeartocovertheirbasiclivingexpenses. IfeldersrentanapartmentinOceanCounty,theirbasiclivingexpensesincreaseto

$28,836. Elders still paying a mortgage face housing costs more than double those for


units,aswellasassistancetocoversupplementalhealthplancosts.3. Elder couples inOceanCountyneed $34,860‐$44,772 to cover theirbasicannual

livingcosts. Elder couples in Ocean County who own their home without a mortgage need

$34,860ayeartocovertheirbasiclivingexpenses. If elder couples rent an apartment in Ocean County, their basic living expenses

increaseto$40,224. Eldercouplesstillpayingamortgagefacehousingcostsmorethandoublethosefor



life circumstances change, such as losing a spouse/partner or experiencing adeclineinhealthstatus. AmemberofaneldercouplepayingmarketraterentinOceanCountyhasexpenses

reducedbyonly28%whenaspouseorpartnerdies,from$40,224to$28,836,yethis or her incomemay decrease substantially based on themix of Social Securityand/orpensionincome.

EldersinOceanCountyfacehealthcarecostsof$476permonth–morethantheyspend on food. A decline in health status results in a $155 monthly increase inhealthcarecosts,adding$1,860annuallytotheelder’sexpenses.


TheImpactofHomeandCommunity‐BasedLong‐TermServicesandSupportsHome and community‐based long‐term services and supports occur along a continuumrangingfromafewhoursofcareperweekto24/7,year‐roundcare.Notalleldersrequirelong‐termsupport,andtheElderIndexshowsitasanadd‐oncomponenttothebasicElderEconomic Security StandardTM Index. However, research has shown that two‐thirds ofseniorswillneed long‐termservicesatsomepoint intheir lateryears;one‐halfwillhaveout‐of‐pocket expenses for care, and 5% will spend as much as $100,000 over theirlifetime.15Usingnationallong‐termcareutilizationdata,theElderIndexconstructedthreepackagesof home‐ and community‐based long‐term services: “low,” “medium,” and “high.”16 Theselectedpackagesare representativeof apossible continuum.Thepackagesassume thatthecareisformal,paidcare,sincetheElderIndexmeasuresthecostsofgoodsandservicesneededbyeldersinthemarketplace.Thehighpackagehastwovariations,onewithAdultDayHealthServices(ADHS)andonewithallservicesprovidedathome.MeasuringCostsofHomeandCommunity‐BasedLong‐TermServicesandSupportsThe services and supports packages modeled here include hourly in‐home services(homemakers/personalcareaidesandhomehealthaides),caremanagement,supplies,andapersonalemergencyresponsesystem.Atthehighlevelofcare,thereisalsoanoptioninwhich one‐half of the care is provided through adult day health services. The long‐termservicespackageoptionsare illustratedinTable6. Forexample,a“low” levelofserviceuseassumes6hoursofcareperweek,allofwhichareintheformofhomemakerservices.A modest amount of care management is assumed, and fees for a personal emergencyresponsesystemarealsoincluded.Incontrast,a“high”in‐homeservicepackageassumes36hoursperweekofsupport,halfofwhichareintheformofhomemakerservicesandhalfintheformofhomehealthassistance.Ahigherlevelofcaremanagementisassumed,andfundsforhealthcaresupplies(e.g.,incontinencesupplies)areincludedaswellasfeesforapersonalemergencyresponsesystem.Next, the Elder Index benchmarks the rates for each element of the long‐term servicespackage inNew Jersey.Table7 presentsprivatepay rates for eachelementof the long‐termservicespackage.

15 Kemper, P., Komisar, H. & Alecxih, L. (2006). Long‐term care over an uncertain future: What can current retireesexpect?Inquiry,42,335‐350.16TheauthorsacknowledgetheworkofJudithConahanindevelopingthelong‐termcarecomponentofthemethodology.


Table6NewJerseyElderEconomicSecurityStandardTMIndex

HomeandCommunity‐BasedLong‐TermSupportsPackageLong‐TermServicesandSupportsat6,16,and36Hours/Week

LevelofNeedforLong‐TermCare Low Medium

Highw/AdultDayHealth*

HighwithoutAdultDayHealth

HoursPerWeek 6hours 16hours 36hours 36hours

Totalcarehourspermonth 26 69 156 156

DistributionofCareHours:

Homemaker 100% 100% 33% 50%

HomeHealthAide Notused Notused 17% 50%

AdultDayhealth(3days/week) Notused Notused 50% Notused

CaseManagement Routine More Intensive Intensive

Supplies None Yes Yes YesPersonalemergencyresponsesystem Yes Yes Yes Yes

Table7NewJerseyElderEconomicSecurityStandardTMIndex

Long‐TermServicesandSupportsPrivatePayRates,2016 Northern

NewJersey

AtlanticCounty

CapeMayCounty

MercerCounty

Cumber‐landCounty

NewJersey

statewideHomemaker/Personalcare(perhour)

$22 $21 $20 $20 $19 $21

HomeHealthAide(perhour) $22 $21 $22 $22 $19 $22AdultDayHealth(dailyrate) $80 $85 $91 $80 $97 $85CaseManagement(perhour) $125 $100 $100 $100 $100 $100Supplies(permonth)* $97 $97 $97 $97 $97 $97PersonalEmergencyResponseSystem(permonth)**

$30 $30 $30 $30 $30 $30

Sources:Homemaker,HomeHealthAide,&AdultDayCarepayratesfromGenworthFinancial2016CostofCareSurveyCaremanagementratesbasedonwebsearches.Suppliesisincontinencesupplies—4.5briefs/day,onlinepurchaseat$51forpackageof72.PERSismedicalalertsystem—PhilipsLifeline,pricedonline


TheImpactofHomeandCommunity‐BasedLong‐TermCareCostsontheElderEconomicSecurityStandardTMIndexTable8 illustratestheannualcostofhomeandcommunity‐basedlong‐termservicesandsupports for elders in New Jersey based on private pay rates. Each component in theservicepackageismultipliedbytherateperhourandnumberofhourstodeterminetheannual cost of obtaining supports to enable elders to remain in their homeswhen theyrequireongoing,longtermservicesandsupport.Thecostofhomeandcommunity‐basedlong‐termservicesandsupportscanaddsubstantiallytothecostsofallotheritemsintheElderIndex,creatingaseverefinancialcrisisforelders’budgets.Long‐termserviceneedscanvaryconsiderablyovertimeandtendtoincreasewithage.

Table8HomeandCommunity‐BasedLong‐TermServicesandSupportsCosts

fortheElderEconomicSecurityStandardTMIndex,2016AtPrivatePayRatesinNewJersey

LevelofNeedforLong‐TermCare Low Medium

Highw/AdultDayHealth*

HighwithoutAdultDayHealth

HoursPerWeek 6hours 16hours 36hours 36hours

NorthernNewJersey1 $8,724 $22,827 $39,095 $47,207

AtlanticCounty $8,112 $21,395 $38,039 $44,435

CapeMayCounty $7,800 $20,563 $38,663 $44,435

MercerCounty $7,800 $20,563 $36,947 $44,435

CumberlandCounty $7,488 $19,731 $38,039 $40,691

NewJersey(statewide) $8,112 $21,395 $38,3512 $45,371*3daysat6hours/day=18hours/weekinAdultDayHealthServicesProgram(=1/2totalhours)

Source:Authors'calculationsfromapplyingprivateratesforNJtothelong‐termcareservicespackageatthreelevels.1TheNorthernNewJerseyareaincludesthefollowingcounties:Bergen,Essex,Hudson,Hunterdon,Middlesex,Monmouth,Morris,Ocean,Passaic,Somerset,Sussex,andUnion.ThesevaluesarealsousedforNewarkCitycalculations.

2ADHSfigureswereunderreportedinthe2015report.Thecorrect2015statewidefigurewas$37,416.

Theneedforlong‐termservicesandsupportsmarkedlyraisescosts,multiplyingtheElderIndex. In New Jersey, the “low” home and community‐based long‐term services packageadds$8,724peryeartolivingexpensesforseniorslivinginthe12‐countyNorthernNewJerseyarea.The “medium”homeandcommunity‐based long‐termservicespackageadds$22,827 per year to living expenses. The “high” home and community‐based long‐termservicespackagewithAdultDayHealthServicesadds$39,095peryeartolivingexpenses.The high home and community‐based long‐term services packagewith all in‐home careadds$47,207peryeartolivingexpenses.Estimatedcostsofhomeandcommunity‐basedlong‐termservicesandsupportsareslightlyloweroutsidetheNorthernNewJerseyarea.


To illustrate the overall impact of purchasing home and community‐based long‐termservicesandsupports,Table9outlinesthefinancialimplicationsatdifferentlevelsofneedand for selected elder household scenarios in Mercer County. Figure 8 illustrates theimpactofaddingthesecostsforanelderrenterinMercerCounty.Theimpactoflong‐termservices costsonestimated living costs in each county is included inAppendixB. NotethattheElderIndexvaluesinTable9andFigure8havebeenadjustedtoreflectanelderin poor health, given that only individualswith poor health are likely to need long‐termservicesandsupports.Overview of Impact of Home and Community‐Based Long‐Term Services andSupportsFindingsforMercerCountyTheneedforhomeandcommunity‐basedlong‐termservicesandsupportscanmorethandouble an elder’s expenses, substantially increasing the income needed to meet basicneeds:

For theMercerCounty elderhousehold scenariosdescribed in this report, the

Elder Index ranges from $29,292 to $53,712 (without purchasing home andcommunity‐based long‐term services, but assuming poor health for the elderpersonorforonememberoftheeldercouple).

Adding home and community‐based long‐term supports for one person addssubstantiallytolivingexpensecosts—$7,800for“low”levelsofcare,$20,563for“medium”levelsofcare,and$36,947‐$44,435for“high”levelsofcare.

Home and community‐based long term supports are preferred by elders toskilled nursing facility care, which is considerably more expensive. Nationalmarketsurveysreportanaveragerateof$118,625annuallyforskillednursingfacilitycare(semi‐privateroom)inNewJersey.17

Wheneldersbecome frailandare inpoorhealth, theymayneedcommunity‐based long‐term services to remain at home. Using the example of an elder renter living alone inMercerCounty,Figure8illustratesthedramaticincreaseinannualexpensesexperiencedwhen low (6hours/week),medium (16hours/week), orhigh (36hours/week) levels ofhome and community‐based long‐term services are required. For example, compared tothe elder renter in poor health who purchases no long‐term services (with estimatedannualexpensesof$30,792),annualexpensesarenearlytwoandahalftimeshigherifhighlevelsofhome‐basedcarearerequired($75,227).

17 https://www.genworth.com/about-us/industry-expertise/cost-of-care.html


Table9TheElderEconomicSecurityStandardTMIndexforMercerCounty,2016

AdditionofHomeandCommunity‐BasedLong‐TermServicesandSupportsCosts*

ElderLivingAlone Two‐PersonElderHousehold

Expenses OwnerwithoutMortgage

RenterOwnerwith

Mortgage


Renter

Ownerwith

MortgageIndexPerYear(assumingpoorhealth) $29,292 $30,792 $41,976 $41,028 $42,528 $53,712

AddImpactofChangesinLong‐TermCarestatus: LowLong‐TermNeed:6hrs/wk

CostPerYear $7,800 $7,800 $7,800 $7,800 $7,800 $7,800IndexPerYear $37,092 $38,592 $49,776 $48,828 $50,328 $61,512

MediumLong‐TermNeed:16hrs/wk


HighLong‐TermNeedwithAdultDayHealth:36hrs/wk


HighLong‐TermNeedallin‐homeSupport:36hrs/wk


*Eldersneedinghomeandcommunity‐basedlong‐termservicesandsupportsarepresumedtobeinpoorhealth.LTSScostsareaddedtothestandardforelderpersoninpoorhealth,andeldercouple,oneinpoorandoneingoodhealth.


Figure8AddingHomeandCommunity‐BasedLong‐TermServicesandSupportsCoststotheElderEconomicSecurityStandardTMIndexforMercerCounty,2016

ExampleofaSingleRenter

TheIncreasedCostofGettingbyinNewJerseyTable10presentsacomparisonbetweentheElderIndexvaluesgeneratedfor2011andthose generated for 2016 and reported in this document. For both household sizecategories, and forallhousing situations, the costofgettingby, as reflectedby theElderIndex values, has increased in New Jersey during this time period. Estimated expensesincreasedmostsubstantiallyforhomeownersinNewJersey,withcostsbeingnearly10%higherforelderslivingalone,and8%higherforthoselivinginatwo‐elderhousehold.TheincreaseinElderIndexvaluesforrentersincreasedalso,butata lowerlevel(3.7%‐3.8%forsinglesandcouples).ThesourceofthemostsubstantialincreaseinvaluesoftheElderIndexinNewJerseywashousingcosts.Basedonstatewideaverages,themonthlyownercostincreasedfrom$871to $1,012 for ownerswithout amortgage, and from$1,871 to $2,122 for ownerswith amortgage. Other costs increased slightly (food, healthcare) or declined slightly(transportation).

$30,792 $30,792 $30,792 $30,792

$7,800

$20,563

$44,435

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

NoLTC WithLowLTC(6hpw)

WithMediumLTC(16hpw)

WithHighLTC(36hpw)

ElderIndex(singlerenter) Long‐TermCareCosts


Table10

2016vs2011ElderIndexComparisonforNewJersey


Ownerwithoutmortgage

RenterOwnerwith

mortgage

Ownerwithoutmortgage

RenterOwnerwith

mortgage

2011 $25,320 $27,960 $37,320 $36,204 $38,844 $48,204

2016 $27,696 $29,016 $41,016 $38,952 $40,272 $52,272

Changes 9.4% 3.8% 9.9% 7.6% 3.7% 8.4%ConclusionThe Elder Index, with its modeled scenarios for older adults living in differentcircumstances,showsthedifficultieslow‐andmoderate‐incomeeldersconfrontinmeetingtheir livingexpenses. Ineverycounty inthestate,elderswho liveat the federalpovertylevel,oraretotallydependentontheaverageSocialSecuritybenefitin2016,needhousingand health care supports to make ends meet. Expenses for long‐term services andsupports,forthosewhoneedthemtostayathome,addsubstantiallytoanelder’sbudget.TheElderEconomicSecurityStandardTMIndex isatool tohelpguidepublic,private,andpersonaldecisionsthatcandirectlyshapethewell‐beingoftoday’sandtomorrow’solderadults. Additionally, it provides information for decisions that aging BabyBoomerswillneed tomake for themselvesand for theolder familymembers forwhomtheycare.Theinformation contained in the Elder Index may be used to develop and advocate forstrategies thatpromoteeconomicsecurity tomeet thegoalsof independence,choiceanddignityforolderadults.


ReferencesButrica,B.,Goldwyn,J.H.,&Johnson,R.W.(2005).UnderstandingExpenditurePatternsin

Retirement.Washington,DC:UrbanInstitute.Availableonline:http://www.urban.org/publications/411130.html

CenterforSocialandDemographicResearchonAging(2017).TheNationalElderEconomic

SecurityStandardTMIndex:MethodologyOverview.CenterforSocialandDemographicResearchonAgingPublications.16.Availableonline:http://scholarworks.umb.edu/demographyofaging/16/

GenworthFinancial(2016).TheGenworthCostofCareSurveyfor2016.Availableonline:

https://www.genworth.com/about‐us/industry‐expertise/cost‐of‐care.htmlKemper,P.,Komisar,H.,&.Alecxih,L.(2006).Long‐termcareoveranuncertainfuture:

Whatcancurrentretireesexpect?Inquiry,42,335‐350.Mutchler,J.,Shih,Y‐C.,Lyu,J.,Bruce,E.,&Gottlieb,A.(2015).TheElderEconomicSecurity

StandardIndex:Anewindicatorforevaluatingeconomicsecurityinlaterlife.SocialIndicatorsResearch,120,97‐116.DOI:10.1007/s11205‐014‐0577‐y

Short,Kathleen(2015).TheSupplementalPovertyMeasure:2014.CurrentPopulation

Reports,P60‐254.WashingtonDC:U.S.CensusBureau.Availableonline:https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60‐254.pdf

SocialSecurityAdministration(2013).ExpendituresoftheAgedChartbook,2010.SSA

PublicationNo.13‐11832.Availableonline:https://www.ssa.gov/policy/docs/chartbooks/expenditures_aged/


AppendixA:DataSourcesDataType Source Assumptions

Housing

Rent:U.S.DepartmentofHousingandUrbanDevelopment.FairMarketRents–for2013,2014and2015.Retrievedfromhttp://www.huduser.orgOwnerCosts:U.S.Census:AmericanCommunitySurvey2011‐2013forPublicUseMicrodataAreas(PUMSdata).Dataretrievedfrom:http://factfinder.census.govRentandOwnercostsadjustedto2016byCPI‐Uforhousing.http://www.bls.gov/cpi/

FairMarketRents(FMRs)for1‐bedroomunitsbyHUDstatisticalarea(countyorcountygroup).Medianselectedmonthlyownercosts(SMOC)forowners65+with,andwithoutamortgage.SMOCincludespropertytaxes,insurance,heat&utilities,condofees,&mortgagepayment(ifany)

Food

U.S.DepartmentofAgriculture,Low‐CostFoodPlan,averageof2013,2014,2015:http://www.cnpp.usda.gov/USDAFoodPlansCostofFood.htmFoodcostadjustedto2016byCPI‐Uforfood.http://www.bls.gov/cpi/

LowCostFoodPlancostsforoldermenandwomenareaveragedtodeterminefoodcostsforelders.PerUSDA,foodcostsforsingleadultsareincreasedby20%toreflectlessereconomiesofscale.

HealthCareCosts(premiumsandout‐of‐pocketcost)

UsingCMSMedicareAdvantageenrollmentrates,itisdeterminedwhetheracountymeetsthecriterionforcalculatingexpensesbasedonMedicareAdvantage(ourmethodologyrequiresatleast20%MedicareAdvantagetakeupinthecounty);countiesthatdonotmeetthiscriterionhavehealthcareexpensesestimatedassumingMedigapcoverage.Allcalculationsassumeprescriptiondrugcoverage.https://www.medicare.gov/find‐a‐plan/questions/home.aspxhttp://www.medicare.gov/find‐a‐plan/questions/search‐by‐plan‐name‐or‐plan‐id.aspxhttps://www.medicare.gov/find‐a‐plan/questions/home.aspxHealthcarecostsadjustedto2016byCPI‐Uformedicalexpenses.http://www.bls.gov/cpi/

Estimatedcostsincludingthe2015premiumforMedicarePartB,supplementalinsuranceplan,prescriptiondrugcoverageandoutofpocketexpenses.CalculatedbytheGerontologyInstitute.

Transportation

PrivateAutomobileCost:NationalHouseholdTravelSurvey(NHTS)http://nhts.ornl.gov/PerMileCost:U.S.InternalRevenueServicehttps://www.irs.gov/Tax‐Professionals/Standard‐Mileage‐RatesTransportationcostsadjustedto2016byCPI‐Ufortransportation.http://www.bls.gov/cpi/

EstimatedannualmileagedrivenbyretiredsinglesandcouplesinNJbyIRSstandardmileagereimbursementrateforoperatingandownercostsfor2015.

Miscellaneous

Miscellaneousexpensesareestimatedat20%ofcostsofotherbasicexpenditurecategories:housing,food,healthcare,andtransportation,whichisequalto16.67%oftotalexpenses.Includesallotheressentials:clothing,shoes,paperproducts,cleaningproducts,householditems,personalhygieneitems,andtelephone.

TheElderIndexcalculatesmiscellaneousexpensesforownerswithoutamortgage,andappliesthatamounttoeachofthehousingtypes.

Long‐TermServicesandSupports

Privateratesforhomemaker,homehealthaide,casemanagementandAdultDayHealthServicesfromGenworthFinancial(2016).2016CostofCareSurvey.Availableonline:https://www.genworth.com/about‐us/industry‐expertise/cost‐of‐care.html

Authors’calculationsusingareacostsforprototypicallevelsoflong‐termcareservicespackages.

The 2016 New Jersey Elder Economic Security StandardTM Index Page The 2016 New Jersey Elder Economic Security StandardTM Index Page 35

Appendix B: Elder Economic Security StandardTM Index for New JerseyCounties and Selected Other Areas, 2016
























Documents

The 2016 New Jersey Elder Economic Security Standard Index EESSI 2016 - 0118.pdfThe 2016 New Jersey Elder Economic Security Standard™ Index Page ii The New Jersey Department of Human