An Examination of Medical Expenses and Retirement Income for the 65+ Population Using the Supplemental Poverty Measure

Kathleen S. Short, U.S. Census Bureau
Judith Eargle, U.S. Census Bureau

This year the Census Bureau released its third report on the Supplemental Poverty Measure (SPM). The SPM follows recommendations from the National Academy of Sciences report (1995) on improving the current official measure. An important finding is that poverty rates for those over age 64 are much higher under the SPM: 8.7 percent using the official measure compared to 15.1 using the SPM. This reflects the large medical out-of-pocket expenses reported by this group and the likely underreporting of regularly received pension and retirement income. Also, the Census income definition does not include lump sum withdrawals from retirement accounts. This failure to account adequately for retirement income may result in higher poverty rates using the SPM. This study addresses these questions by using the Survey of Income and Program Participation Retirement and Pension Plan Coverage topical module to evaluate the role of retirement income in SPM rates for this group.