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Home arrow Marketing Research News arrow Market Research Blogs arrow Study Looks Into The End-Of-Life Financial Situation In America
Study Looks Into The End-Of-Life Financial Situation In America PDF Print E-mail
Written by Anand Srinivasan   
28 May 2015

A recent study published by the Employee Benefit Research Institute (EBRI) throws a pretty scary picture for the aging population in the United States. According to Sudipto Banerjee, senior research associate who authored the report, close to 12.2% of people aged 85 and above did not own any assets when they died. About 20.6% of people in this age group did not own any assets other than a house.

While this is on expected lines, what is scary is that close a third of the younger seniors – aged between 50 and 64 years – did not own any assets either when they died. Also, households where at least one person died in this relatively younger age group had significantly lower incomes compared to the rest of the population.

The Importance of Social Security

There has been a lot of debate in the United States about the legacy and future of social security with some calling the present model of social security unsustainable. But the EBRI study shows that without social security, a number of seniors would be left without any sustainable income. Among the recently deceased singles, social security contributed nearly two-thirds of the household income. Among couples aged 75 or more, close to 60% of the household income was primarily from social security.

Debt Levels

Among people who died aged 85 and above, 9.1% of the studied population had an outstanding debt other than mortgage. In terms of value, the average debt was found to be around $6,368. Also, the average equity left in their home was close to $83,471. This is an interesting revelation since it shows that a lot of these senior citizens did not avail reverse mortgage even when they had the opportunity to do so. Reverse mortgage, for the uninitiated, is the process of borrowing money against the value of their home – these borrowers are not expected to repay and instead allows the lender to redeem the loaned amount when the house is sold or the owner dies. Here is a quick link to help readers understand how reverse mortgages work.

Low Asset Holding

One must also look at the value of assets held by those who died in the various age-groups. In the 50-64 years age group, nearly 44.6% of the population died with assets valued less than $10,000. This figure for the age groups 65-74, 75-84 and 85+ are 27.4%, 23.6% and 23% respectively. This figure is especially gloomy for the 50-64 age group – with less than $10,000 worth of assets, the situation may have been grim for those who managed to live longer.

One of the biggest takeaways from the study is the eerie correlation between early deaths and low assets. Sudipto Banerjee, the author of the report points out that while his report does not make reveal the actual reasons behind the early deaths, several other reports do suggest that people with lower incomes do not afford all the health care that they needed. This effectively means that poor health inhibits their ability to work and earn income. He concludes saying “both can affect the other.”

Another reason why people who died aged 85 and above had higher income and assets was because a significant chunk of this population relied on company pensions. On the other hand, the younger senior groups relied on 401(k)s for income in their older age – something that they receive only if they had contributed to in the first place.
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