In a recent podcast, I talk with Laura D. Quinby of the Center for Retirement Research at Boston College (CRR) and Luc Schuster of Boston Indicators  about their study Wealth Gaps in the Golden Years: Economic Insecurity for Older Adults in a High-Cost State.

They examined economic insecurity for older adults in Massachusetts through both quantitative analysis carried out by the CRR and focus groups with low-income seniors conducted by Boston Indicators.

The Data

It’s no surprise that Massachusetts seniors typically have more wealth than the national average, but it’s also more unevenly distributed than in most states – the top third holds over $3.5 million on average while the bottom third has just over $50,000.

A large part of the wealth inequality comes from home ownership, as homeowners have benefited from price appreciation while renters have not. As a result, “a much greater share of households here are falling short of how much income they would need to meet their basic needs and age in their homes with dignity,” Quinby said.  Overall, about 40 percent of Massachusetts seniors lack sufficient income to meet basic needs as compared to 30 percent nationally.

Racial disparities are especially stark. “So our lower-income, lower-wealth households…are disproportionately Black and Hispanic,” according to Quinby. “When coupled with the high cost of living, this means that a very, very high share of older, Black and Hispanic households here are falling short [about 9 in 10 compared to 1 in 3 White households]… That’s pretty shocking.”

How Low-Income Seniors Cope

Boston Indicators conducted in-depth interviews, mostly with Boston residents who were recruited by non-profits that serve them. As a result, it was not a representative sample, but still paints a picture of how low-income seniors cope. “The idea was, based on the findings from Laura’s research, to set up a series of focus groups with the lowest-income, lowest-wealth subset of seniors…to get a better sense of…[how] they make ends meet,” Schuster explained.

Twenty of the 29 participants in the focus groups live in subsidized housing, which serves as a vital lifeline. “That’s just a huge difference-maker and many of them spoke to how critical that lifeline was for them. They also spoke to the importance of other public benefits like SSI and SNAP and MassHealth [the state’s Medicaid program].”

In terms of the availability of subsidized housing, Boston may be unusual. “Our sense is that greater Boston, and especially the city of Boston, really has done more than many other major U.S. cities to provide subsidized housing for the lowest-income families. So we’re doing something right here.” But while subsidized housing helps the poorest residents, Schuster said that moderate-income families also need help.

The researchers were surprised by one particular finding: the participants do not rely heavily on their adult children. “Several of the interviewees said very directly that they were doing their best to avoid asking their adult kids for financial support because they didn’t want to be a burden on [them]” Schuster reported.

This finding might have been because so many of the participants live in subsidized housing. “We were talking to folks who were plugged into social service providers in Boston. There may be a large population still, especially out in the suburbs, of lower-income, lower-wealth seniors living with their adult kids.”

Keep Working?

We discussed whether working longer would help lower-income seniors bridge the gap between their financial resources and needs. Quinby said that “we often tell people that one of the best ways to achieve a secure retirement is to work as long as you can…Of course, many people just can’t keep working due to physical or health issues. So it is hard. On the one hand, you want to allow people who really need to stop working to do that and still have a secure, dignified retirement. But on the other hand, working is a really powerful tool for improving your financial security.”

Working longer also has other potential benefits. “Research has shown that it helps with your mental health. It helps with your physical health. It helps you maintain your social network.”

Policy Recommendations

To assist lower-income older residents of Massachusetts, Quinby recommended passing the Secure Choice bill, which would require most employers without a retirement plan to either adopt a plan or help their workers enroll in a state auto-IRA program. According to Georgetown University, almost half of private sector employees in Massachusetts do not have access to an employer-sponsored plan. This initiative would not help today’s retirees but could have a great impact in the future. The plan passed the state legislature earlier this year but was vetoed by Governor Maura Healey who sent it back for further study.

Schuster recommended that more rental housing be built near mass transit to allow seniors to downsize while staying in their communities. This approach might also free up some single-family housing for younger families and lower the cost of home health care if caregivers could care for multiple seniors in a single apartment building rather than for individuals scattered through the community.

For more from Harry Margolis, check out his Risking Old Age in America blog and podcast.  He also answers consumer estate planning questions at AskHarry.info.  To stay current on the Squared Away blog, join our free email list.