Rising costs burden low-income older adults, AARP study finds

For many older adults living on limited incomes, the challenge of affording daily essentials is growing more difficult. A recent report from the AARP Public Policy Institute (PPI) highlights a significant financial squeeze, showing that low-income households headed by individuals aged 50 and older are dedicating a large portion of their budget to basic needs, and these costs are outpacing their income growth [Medicare Rights Center].

Basic Needs Drive Spending

The study, which analyzed data from the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, found that low-income households with individuals aged 50 and above spend over 80% of their total budget on fundamental necessities. These include housing (36%), food and groceries (20%), transportation (15%), and healthcare and insurance (12%) [Medicare Rights Center].

Comparatively, higher-income households in the same age group allocate a smaller share, about 73%, to these basic expenses. The disparity is particularly noticeable in housing and food costs, which collectively account for roughly 56% of spending for low-income older adults, compared to 46% for other older households [Medicare Rights Center]. Healthcare also represents a significant burden, consuming 12% of the budget for low-income older adults, which is higher than the 10% for other older households and substantially more than the 3% for low-income households without an older adult [Medicare Rights Center].

Income Lags Behind Rising Expenses

The financial pressure on these households has intensified over the past two decades. Even after accounting for inflation, expenses for essentials have climbed, with food costs up by 27%, healthcare by 17%, and housing by 15% [Medicare Rights Center].

Despite a modest increase in average post-tax income for low-income 50+ households—from about $18,600 to $21,300, a $2,700 rise—this growth has not kept pace with the surge in annual expenses. Average annual spending for these households jumped from approximately $27,600 to $36,100, an $8,500 difference, over the same period [Medicare Rights Center].

The Real-World Impact

This growing gap between income and expenses suggests that many older adults are resorting to drawing down savings, falling behind on bills, or accumulating debt to make ends meet. The report underscores a concerning reality: many older adults have minimal financial reserves. In 2024, it was estimated that one in four Medicare beneficiaries (16.5 million people) had an income below $24,600, and one in ten had no savings or were already in debt [Medicare Rights Center]. These statistics highlight the urgent need for solutions to support the financial well-being of older adults facing these affordability challenges.