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Income Challenge

Empowering People to Earn a Living

More than 20 million older adults are at risk of not having enough income to meet their basic needs or are facing crippling debt. AARP Foundation encourages innovations that help increase the income and lower the costs of low-income older people, and increase the access of low-income older people to affordable financial services.

  • Higher than average poverty levels are found among minorities age 65-plus. Compared with 6.8 percent of whites 65-plus, 18 percent of African Americans, 18 percent of Hispanics and 14.6 percent of Asians were at or below the poverty level in 2010.
  • Higher than average poverty rates were also found in 2010 among older people living in principal cities (11.2 percent), rural areas and small towns (10.4 percent), and in the South (10.5 percent).
  • The poverty rate was higher among older women (10.7 percent) than older men (6.7 percent).
  • Older persons living alone were much more likely to be poor (16.0 percent) than those living with families (5.3 percent).
  • Older African American (30.7 percent) and Hispanic (40.8 percent) women who lived alone experienced the highest poverty rates.
  • The major sources of income as reported by older persons in 2009 were Social Security (reported by 87 percent of older persons), income from assets (reported by 53 percent), private pensions (reported by 28 percent), government employee pensions (reported by 14 percent), and earnings (reported by 26 percent). Of those receiving Social Security in 2009, such receipts constituted 90 percent or more of the income received by 35 percent of beneficiaries.
  • Unemployment was 6.3 percent for those 55-plus in April 2012 compared with 3.2 percent at the start of the recession. Older workers have longer periods of unemployment than other age groups: In April 2012, the average length of unemployment was 60 weeks.

Low-income older people make less use of financial services than higher-income seniors. Many of them now either don't have or don't use checking accounts or savings accounts at banks or credit unions. A recent AARP Foundation/PPI study found minorities and people who earn less than $25,000 a year are much more likely not to have or use traditional checking and savings accounts.

  • Among those 45-64, African Americans were almost three times less likely and Hispanics almost two times less likely than whites to have a checking account.
  • African Americans and Hispanics 65-plus were twice as likely as whites not to have a checking account.

Being unbanked or underbanked can put struggling people at even more of a disadvantage. A household with a net income of $20,000 per year without a checking account may pay as much as $1,200 a year for basic financial services such as check cashing and payday loans; annual interest rates and fees can exceed 900 percent.

  • A March 2012 study by the Federal Reserve found that 64 percent of individuals who are unbanked and 91 percent of the underbanked have access to a phone. The study found that the underbanked make "comparatively heavy use" of mobile banking, with 29 percent of the underbanked and 10 percent of the unbanked having used mobile banking in the preceding 12 months. Although individuals age 60 and over account for 24 percent of all mobile-phone users, the study found that they only account for 6 percent of all mobile banking users.

The Foundation encourages innovations that increase the income and lower the costs of low-income older people, and increase the access of low-income older people to affordable financial services.