Reducing poverty among older adults

Executive summary

Approximately 6%¹ of elderly adults have insufficient resources to meet their basic needs. While this rate is similar to other age groups, elderly poverty is particularly troubling because their financial lives are often intertwined with their health, and deterioration in either can create significant burdens for the social safety net and younger generations.

This policy brief will outline the problem of poverty among older adults and why action is needed. It will suggest potential policy recommendations for reducing elderly poverty by making changes to current social insurance programs, focusing on Supplemental Security Income (SSI) and Medicare, alongside Supplemental Nutrition Assistance Program (SNAP), housing, and Social Security reforms.

Our policy recommendations include:

• Broadly expand SSI benefits
• Improve and simplify the SSI program
• Update the SSI-Social Security interaction
• Increase participation in SSI and SNAP
• Lower Medicare premiums for low-income beneficiaries
• Reduce cost-sharing in Medicare
• Increase housing vouchers and options for older adults and disabled individuals

Our preliminary microsimulation² predicts that these policies will cost approximately $2 trillion over 10 years but reduce the elderly poverty rate to below 2 percentage points, while substantially improving the lives of elderly adults between 100 and 200% of the poverty line. These policies will also lower poverty among the disabled population and improve the incomes of many disabled adults receiving SSI and/or Medicare. 

Introduction

Despite decades of progress, poverty among older adults in the United States remains a serious concern. Using the Supplemental Poverty Measure (SPM) from the National Experimental Well-being Statistics (NEWS), poverty among older adults was around 6.1% for 2021.

Although the elderly poverty rate is similar to that of non-aged adults (6.2%) and children (5.5%), the problem demands attention for several reasons. First, elderly adults are prone to significant and unexpected hardships due to medical episodes and their costly treatments. Furthermore, health fragility often means that the consequences of financial hardships, such as missed medical treatments, poor nutrition, and deteriorated living conditions, compound quickly and are difficult to reverse. Compared to working-age adults, older adults are less capable of increasing their income with labor due to outdated skill sets or age discrimination. When the financial and consequential burdens become too great, they can have significant effects on younger generations who must use their own resources to help. Finally, while NEWS estimates of elderly poverty are not available for 2024, survey data show that the elderly supplemental poverty rate has increased by over 4 percentage points.

In a preliminary microsimulation³ of current law, utilizing adjustments for the underreporting of income, we find that the elderly poverty rate is much lower than unadjusted survey results suggest. However, the poverty rate varies significantly by demographics. As Table 1 shows, the elderly poverty rate is significantly higher for females over 80 years old, particularly those who are Black or Hispanic. Additionally, the highest poverty rates are for elderly noncitizens.

Current policy landscape

SSI, SNAP, and the Medicare Savings Programs supporting older adults have low participation rates. They are often outdated, lack automatic adjustments for inflation (asset limits in SSI), and are strained by the needs of a rapidly aging population. Therefore, addressing poverty among older adults requires a creative, multi-pronged revisiting of existing social programs to modernize policy in a way that better serves those receiving assistance.

This brief outlines a package of policy changes, primarily focused on SSI and Medicare, with additional reforms to SNAP and housing, that would reduce poverty among older adults and disabled SSI beneficiaries. In doing so, it aims to build consensus around a path to reducing elderly poverty to under 2%. The policies presented in this paper would also significantly increase incomes for those somewhat above the poverty threshold. Many provisions have been highlighted individually in previous issue briefs and are discussed at length here.

These proposals should be pursued alongside Social Security solvency reform. Pursuing these safety net policy changes simultaneously with Social Security solvency will result in providing economic support for all older adults.

Policy recommendations

Existing social insurance programs can be modified to better support and reflect the experiences of low-income older and disabled adults. The proposals below primarily focus on changes to SSI, supplemented with recommendations regarding Medicare and housing. Together, these changes would modernize a safety net that has not kept pace with the needs of a rapidly aging population.

Supplemental Security Income (SSI) policy

The set of changes to SSI is meant to enable most SSI beneficiaries to live above the poverty level. The proposed policies include broad-based SSI benefit expansions, simplifying the SSI program, updating the interaction between Social Security and SSI, and increasing participation rates in SSI and SNAP.

Broadly expand SSI benefits

Over half of SSI beneficiaries in 2022 received no income beyond their SSI benefit, and today, a single beneficiary relying solely on the Federal Benefit Rate (FBR) is brought to only 75% of the Federal Poverty Level (FPL).⁴ We propose increasing the SSI FBR by $70 for a single individual and $105 for a couple, indexed to inflation going forward, to better fulfill SSI’s expressed goal of creating a meaningful income floor.⁵

Improve and simplify the SSI program

Several SSI rules were set in 1972 with few to no adjustments. As such, they have not kept up with inflation, while the consumer price index over the same period increased by over 650%.

We recommend raising the asset limits for individuals from $2,000 to $10,000 and from $3,000 to $20,000 for couples⁶, indexed to inflation, with an additional exclusion for dedicated retirement savings accounts. We also propose increasing the general income disregard from $20 to $60 and the earned income disregard from $65 to $200, indexed to inflation; eliminating the In-Kind Support and Maintenance (ISM) requirements, which reduce benefits for those receiving help with rent, mortgage, or utilities; and holding beneficiaries harmless for fluctuations in earnings or assets between redetermination reviews.⁷

Update the SSI-Social Security interaction

A central element of our proposal is adjusting the way the SSI program interacts with the Social Security program. As of April 2026, approximately 2.5 million individuals received both Social Security and SSI benefits. When an individual receives Social Security and SSI, the SSI benefit is calculated by disregarding $20 from their Social Security benefit and then deducting one dollar of SSI benefit from the FBR for each dollar of Social Security benefit. Ignoring other income sources, an individual with a $1,000 Social Security benefit will have roughly the same income as someone who has no Social Security income, since the latter will receive approximately $1,000 in SSI benefits. Due to this interaction, an individual just on the cusp of SSI eligibility will have paid over $60,000 in payroll taxes during their lifetime but only receives a $20 monthly benefit.

To better maintain the benefit-contribution link that is fundamental to Social Security while enhancing the economic security of retired workers, we propose increasing the current $20 disregard to $60, indexing the $60 to inflation, and adding an additional 40% disregard to the remaining Social Security benefits when calculating an individual’s SSI benefit.⁸ Given that the disregard has not been changed since the 1970s and is equivalent to a value of about $160 today, the $60 portion of the disregard is a modest increase. Table 2 illustrates how the proposal would increase the amount of Social Security income disregarded when determining SSI eligibility and benefits levels. That is, someone receiving $400 in monthly Social Security benefits would receive a $196 disregard, while someone receiving $1,000 per month would receive a $436 disregard. As a result, more Social Security income would be excluded from SSI calculations, allowing eligible older adults to retain a larger share of their SSI benefits and increasing overall income support. And the additional amount disregarded would increase the return on Social Security payroll taxes.

Increase participation in SSI and SNAP

Low participation rates in SSI and SNAP, 50% and 30%, respectively, suggest that many older adults are not accessing the meaningful assistance they are entitled to receive. These low rates are likely driven by administrative burden, stigma, discomfort with technology, unclear program rules, and underfunding of agencies like the Social Security Administration (SSA). We recommend significantly simplifying current enrollment procedures for both programs to reduce these barriers and make enrollment more streamlined and automatic. SSA already uses Internal Revenue Service (IRS) tax data to administer income-related Medicare premiums; this same mechanism could identify individuals who meet the SSI income threshold but are not enrolled and proactively notify them of their likely eligibility. We also propose automatically enrolling aged SSI recipients in SNAP, and SNAP recipients in SSI. We estimate that these reforms would increase participation rates in SSI and SNAP from 50% and 30% to 90% for both programs.

Medicare policy

The following proposals aim to reduce the financial burden that Medicare premiums and cost-sharing place on low-income older adults. Together, they would make Medicare more equitable and financially accessible for those who need it most.

Lower premiums for low-income beneficiaries

Medicare premiums can represent a significant share of beneficiaries’ incomes, particularly for those at or near the poverty level, posing a substantial burden on low-income older adults.⁹ Therefore, we propose making Medicare Part B and Part D premiums entirely income-based, with no premiums required for beneficiaries below 150% of the FPL—mirroring the structure of Affordable Care Act (ACA) marketplace subsidies. Anyone receiving SSI, SNAP, or Medicaid would also have premiums set to zero. The current Medicare Savings Programs and Low-Income Subsidy for Part D would be repealed and replaced by this unified, income-based structure, administered by SSA. Part B premiums would mirror ACA marketplace premiums and would equal 8.5% of income above 150% of the poverty threshold and would be capped when the 25% rule is satisfied at roughly twice the current flat premiums. The 25% rule requires premiums to offset 25% of Part B costs. Part D premiums would be somewhat more complicated but follow a similar pattern. 

Reduce cost-sharing

Additionally, we propose reducing cost-sharing in Medicare. Currently, there is no out-of-pocket maximum in Medicare. We recommend implementing an out-of-pocket maximum for Medicare beneficiaries that is $5,000 for an individual or couple.

Housing policy

Housing subsidies in the form of vouchers and certificates have been shown to be among the most efficient approaches to providing assistance to vulnerable populations. We recommend increasing the number of Section 202 and Section 8 Housing Choice vouchers by 20% each to address the large and growing housing needs facing older adults and disabled individuals.

Preliminary model results

We developed a comprehensive microsimulation¹⁰ of the proposed laws utilizing the 2022 Current Population Survey (CPS) Annual Social and Economic Supplements (ASEC) and the Health and Retirement Study (HRS), adjusting for underreported income as estimated by NEWS and the Transfer Income Model (TRIM). We also include simulations of two proposals from Fixing Social Security: Blueprint for a Bipartisan Solution, which are likely to have targeted effects on elderly poverty—the Grandparent Caregiver benefit and the revised Survivor Benefit.¹¹ Preliminary model results, shown in Table 3, suggest these safety net policy changes are estimated to cost $2 trillion over a 10-year window. Although expensive, the SSI policy changes are more targeted compared to other poverty-reduction proposals involving Social Security.

Costs completely offset

The costs would be completely offset through a combination of four different policy adjustments. The cost of lowering Medicare premiums for low-income beneficiaries would be offset by increased premiums for high-income beneficiaries. The two policies affecting Social Security benefits (Grandparent Caregiver and Survivor Benefit) would be offset by methods detailed in Fixing Social Security: Blueprint for a Bipartisan Solution. The remainder of the cost would be offset by restoring parity between Medicare Advantage reimbursement and traditional Medicare. This reduction in reimbursement to Medicare Advantage plans would be phased in over a 5-year period. The remainder of the costs would be offset by the drug pricing policy. The Medicare negotiated rate would also apply to commercial insurance; the number of drugs to be negotiated would be increased somewhat, and the length of time that drugs would be on the market before being eligible for negotiation would be shortened. 

We estimate that our package of proposals, if enacted, would lift nearly all older adults out of poverty (except for families with substantial assets and capital income), as well as substantially improve the incomes of elderly individuals living up to 200% of the poverty level. Overall, as shown in Table 4, we estimate that our proposals would reduce poverty among older adults by nearly 70%. An additional analysis of the microsimulation reveals that most of those remaining in poverty either have substantial wealth and capital income or are eligible for SSI and SNAP but do not participate. This meaningful reduction in poverty translates to a large increase in the wellbeing of older adults in the United States and many disabled adults receiving SSI and/or Medicare.

Conclusion

Poverty rates among older adults are rising, and the existing social safety net is outdated and insufficient. While poverty rates are lower than in some other age groups on average, too many older adults remain in poverty, particularly among women, individuals over age 80, and noncitizens. We propose improvements to SSI, SNAP, housing vouchers, Social Security, and Medicare, which achieve poverty alleviation in targeted, efficient, and common-sense ways. We estimate that the implementation of this suite of policies would reduce poverty among older adults by about two-thirds on average. While the costs are high, we propose a combination of policies that, together, completely offset any additional costs.