K A I S E R FA M I LY F O U N DAT I O N
Medicare Policy
Projecting Income and Assets: Data spotlight
Projecting Income and Assets: Projecting Income and Assets: What Might the Future Hold for What Might the Future Hold for Projecting
Income
and assets:
What Might the Future Hold for the Next Generation of Medicare Beneficiaries? the Next Generation of Medicare Beneficiaries? What
might
the future hold for the next generation of medicare
the Next Generation of Medicare Beneficiaries? beneficiaries?
JUNE 2011 JUNE 2011 As national attention turns to the federal deficit, some policymakers have proposed reforms to Medicare, Medicaid and JUNE 2011 As national attention turns to the federal deficit, some policymakers have proposed reforms to Medicare, Medicaid and Social Security that could have significant implications for current and future generations of seniors and younger adults As national attention turns to the federal deficit, some policymakers have proposed reforms to Medicare, Medicaid and Social Security that could have significant implications for current and future generations of seniors and younger adults with disabilities. This data brief describes the income and assets of the current Medicare population, and examines the Social Security that could have significant implications for current and future generations of seniors and younger adults with disabilities. This data brief describes the income and assets of the current Medicare population, and examines the extent to which income and assets are likely to be higher for the next generation of beneficiaries. The analysis is based with disabilities. This data brief describes the income and assets of the current Medicare population, and examines the extent to which income and assets are likely to be higher for the next generation of beneficiaries. The analysis is based on the Dynasim microsimulation model developed by researchers at the Urban Institute, described on page 4. extent to which income and assets are likely to be higher for the next generation of beneficiaries. The analysis is based on the Dynasim microsimulation model developed by researchers at the Urban Institute, described on page 4. on the Dynasim microsimulation model developed by researchers at the Urban Institute, described on page 4. KEY FINDINGS KEY FINDINGS KEY FINDINGS Income.
Half of all Medicare beneficiaries had incomes below $22,000 in 2010; less than one percent had incomes Income.
Half of all Medicare beneficiaries had incomes below $22,000 in 2010; less than one percent had incomes over $250,000. Income.
Half of all Medicare beneficiaries had incomes below $22,000 in 2010; less than one percent had incomes over $250,000.  Median per capita income is lower for black and Hispanic than for white beneficiaries, lower for non‐married over $250,000.  Median per capita income is lower for black and Hispanic than for white beneficiaries, lower for non‐married than married beneficiaries, and declines with age among seniors.  Median per capita income is lower for black and Hispanic than for white beneficiaries, lower for non‐married than married beneficiaries, and declines with age among seniors.  Per capita income is projected to rise by 2030, but much of this growth is projected to occur mainly at higher than married beneficiaries, and declines with age among seniors.  Per capita income is projected to rise by 2030, but much of this growth is projected to occur mainly at higher incomes, with greater gains among white than black or Hispanic beneficiaries.  Per capita income is projected to rise by 2030, but much of this growth is projected to occur mainly at higher incomes, with greater gains among white than black or Hispanic beneficiaries. incomes, with greater gains among white than black or Hispanic beneficiaries. Savings.
Half of all Medicare beneficiaries have less than $2,100 in retirement account savings (such as IRAs), and Savings.
half of all Medicare beneficiaries have less than $31,000 in other financial assets (such as savings accounts); five Savings. Half of all Medicare beneficiaries have less than $2,100 in retirement account savings (such as IRAs), and Half of all Medicare beneficiaries have less than $2,100 in retirement account savings (such as IRAs), and half of all Medicare beneficiaries have less than $31,000 in other financial assets (such as savings accounts); five percent have combined savings of more than $1,000,000. half of all Medicare beneficiaries have less than $31,000 in other financial assets (such as savings accounts); five percent have combined savings of more than $1,000,000. White beneficiaries have significantly more in savings than black or Hispanic beneficiaries. percent have combined savings of more than $1,000,000.  White beneficiaries have significantly more in savings than black or Hispanic beneficiaries. The racial gap in savings is projected to widen by 2030.  White beneficiaries have significantly more in savings than black or Hispanic beneficiaries.  The racial gap in savings is projected to widen by 2030.  The racial gap in savings is projected to widen by 2030. Home Equity.
Half of all Medicare beneficiaries have less than $60,000 in home equity in 2010. Home Equity.

The average value of home equity was substantially higher for white than black or Hispanic beneficiaries; Home Equity. Half of all Medicare beneficiaries have less than $60,000 in home equity in 2010. Half of all Medicare beneficiaries have less than $60,000 in home equity in 2010.  The average value of home equity was substantially higher for white than black or Hispanic beneficiaries; racial differences in home equity are projected to persist over the next decades.  The average value of home equity was substantially higher for white than black or Hispanic beneficiaries; racial differences in home equity are projected to persist over the next decades. racial differences in home equity are projected to persist over the next decades. Half of all Medicare beneficiaries had incomes below $22,000 in 2010; median per capita Half of all Medicare beneficiaries had incomes below $22,000 in 2010; median per capita income is lower for black and Hispanic beneficiaries, lower for non‐married beneficiaries and Half of all Medicare beneficiaries had incomes below $22,000 in 2010; median per capita income is lower for black and Hispanic beneficiaries, lower for non‐married beneficiaries and declines with age among seniors. income is lower for black and Hispanic beneficiaries, lower for non‐married beneficiaries and declines with age among seniors. Half of all Medicare beneficiaries had Median Income Among Medicare Beneficiaries, 2010
declines with age among seniors. Half of all Medicare beneficiaries had incomes below $21,183 in 2010. Median per Half of all Medicare beneficiaries had incomes below $21,183 in 2010. Median per capita income is substantially higher for incomes below $21,183 in 2010. Median per capita income is substantially higher for white beneficiaries than for black or Hispanic capita income is substantially higher for white beneficiaries than for black or Hispanic beneficiaries. Across all ages, median per white beneficiaries than for black or Hispanic beneficiaries. Across all ages, median per capita income is lower for the under‐65 beneficiaries. Across all ages, median per capita income is lower for the under‐65 disabled than for seniors; among seniors, capita income is lower for the under‐65 disabled than for seniors; among seniors, those ages 85 and older had relatively low disabled than for seniors; among seniors, those ages 85 and older had relatively low incomes, with more than half living on an those ages 85 and older had relatively low incomes, with more than half living on an income of less than $18,000 in 2010. Non‐
incomes, with more than half living on an income of less than $18,000 in 2010. Non‐
married beneficiaries have significantly lower income of less than $18,000 in 2010. Non‐
married beneficiaries have significantly lower incomes than married individuals. married beneficiaries have significantly lower incomes than married individuals. incomes than married individuals. The distribution of beneficiaries’ incomes is The distribution of beneficiaries’ incomes is skewed; one‐quarter of beneficiaries had The distribution of beneficiaries’ incomes is skewed; one‐quarter of beneficiaries had incomes below $12,760, while less than one skewed; one‐quarter of beneficiaries had incomes below $12,760, while less than one percent had incomes exceeding $250,000.
incomes below $12,760, while less than one percent had incomes exceeding $250,000.
percent had incomes exceeding $250,000.
Median Income Among Medicare Beneficiaries, 2010
Median Income Among Medicare Beneficiaries, 2010
Race /Ethnicity
Age
Race /Ethnicity
Race /Ethnicity
Age
$26,780 $23,521 $21,183 $21,183 $21,183 $23,521 $23,521 $14,186 $13,527 $14,186 $14,186 $13,527 $13,527 Total
Age
$26,780 $26,780 $20,926 $14,479 $14,479 $14,479 $20,926 $17,237 $20,926 $17,237 $17,237 Marital Status
Marital Status
$25,198 Marital Status
$25,198 $25,198 $19,152 $17,105 $19,152 $19,152 $17,105 $17,105 $12,540 $12,540 $12,540 White Black Hispanic
Under 65‐74 75‐84
85 or Married DivorcedWidowed Single
65
older
Total
White
Black
Hispanic
Under 65‐74
75‐84
85 or Married DivorcedWidowed Single
$14,371 $9,696 $8,675
$6,505 $15,428 $13,135 $12,094
$14,952 $13,465 $10,480 $8,762
25th percentile . $12,760
65
older
Total
White Black Hispanic
Under 65‐74 75‐84
85 or Married DivorcedWidowed Single
65
older
75th percentile . $39,014
$42,135 $25,748 $22,496
$24,086
$47,071 $37,463 $30,599
$41,960 $38,520 $34,054 $22,526
th $14,371 $9,696 $8,675
$6,505 $15,428 $13,135 $12,094
$14,952 $13,465 $10,480 $8,762
25 percentile . $12,760
$12,760
$14,371 $42,656
$9,696 $41,634
$8,675
$6,505 $78,224
$15,428 $58,888
$13,135 $12,094
$14,952
$8,762
25th percentile . $63,251
$67,811
$42,700
$48,329
$64,984 $13,465
$63,910 $10,480
$62,437 $48,993
90
75th percentile . $39,014
$42,135 $25,748 $22,496
$24,086 $47,071 $37,463 $30,599
$41,960 $38,520 $34,054 $22,526
th percentile . $87,023
75th
$39,014
$42,135 $55,941
$25,748 $54,432
$22,496
$24,086 $106
$47,071
$37,463 $62,974
$30,599
$41,960 $86,048
$38,520 $92,528
$34,054 $72,661
$22,526
$92,887
$58,394
,832 $77,085
$88,066
95
$67,811 $42,656 $41,634
$42,700 $78,224 $58,888 $48,329
$64,984 $63,910 $62,437 $48,993
90th percentile . $63,251
$67,811 $42,656 $41,634
$42,700 $78,224 $58,888 $48,329
$64,984 $63,910 $62,437 $48,993
90th percentile . $63,251
percentile . $87,023
$92,887 $55,941 $54,432
$58,394 $106,832 $77,085 $62,974
$88,066 $86,048 $92,528 $72,661
95thTotal household income for couples is split equally between husbands and wives to estimate income for married beneficiaries. NOTE:
SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
$92,887 $55,941 $54,432
$58,394 $106,832 $77,085 $62,974
$88,066 $86,048 $92,528 $72,661
95th percentile . $87,023
NOTE: Total household income for couples is split equally between husbands and wives to estimate income for married beneficiaries. SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
NOTE: Total household income for couples is split equally between husbands and wives to estimate income for married beneficiaries. SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
K A I S E R FA M I LY F O U N DAT I O N
Medicare Policy
Data Spotlight
Per capita income is projected to rise, but much of this growth is projected to occur at higher incomes, leading to a wider income gap among the next generation of beneficiaries. Growth in Per Capita Income Among Medicare Beneficiaries, 2005 – 2030 Per Capita Total Income (in 2010 dollars)
$140,000
$118,393 $120,000
95th percentile
$100,000
$80,000
$60,000
$85,868 $78,147 90th percentile
$56,844 $51,642 75th percentile
$40,000
$20,000
$0
$34,953 $18,746 50th percentile (Median)
$27,006 25th percentile
$14,951 $11,644 2005
2010
2015
2020
2025
2030
Year
NOTE: All incomes are adjusted to 2010 dollars.
SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
For most of the next generation of Medicare beneficiaries, average incomes will be moderately higher than the incomes of the current generation of beneficiaries, after adjusting for inflation; however, the growth is projected to be concentrated in the upper incomes. Projections show that, compared to the current generation, incomes will be 17 percent higher for the next generation of beneficiaries in the bottom quarter of the income distribution, but 36 percent higher for beneficiaries in the top ten percent of the income distribution. Twenty‐five percent of the next generation of beneficiaries will have incomes that are below $15,000 and about half will have incomes below $27,000. Ten percent of beneficiaries will have incomes above $86,000 and less than five percent will have incomes above $119,000 in 2030. Between 2010 and 2030, white beneficiaries will see greater gains in income than black or Hispanic beneficiaries. Overall, the share of Medicare beneficiaries living in poverty, or who are near‐poor, is projected to decline by 2030, while a larger share of beneficiaries is projected to have 600% or more of Poverty
200‐599% of Poverty
incomes above 600 percent poverty. 100‐199% of Poverty
Less 100% of Poverty
Between 2010 and 2030, the share of all 9%
9%
Medicare beneficiaries living on incomes at 15%
18%
19%
22%
30%
or above 600 percent of poverty is projected 34%
to rise from 19 percent to 30 percent. 38%
38%
However, much of this growth is among 45%
43%
46%
white beneficiaries, and the differences 48%
44%
between white, black, and Hispanic 44%
31%
34%
beneficiaries’ incomes are projected to 26%
25%
persist for the next several decades. By 24%
22%
18%
2030, one‐third of all white beneficiaries are 16%
21%
19%
14%
14%
11%
8%
8%
projected to have incomes at or above 6%
2010
2030
2010
2030
2010
2030
2010
2030
600 percent of poverty – about double the Total
White
Black
Hispanic
share projected for black or Hispanic NOTE: In 2010, the federal poverty level is $10,830 in income per year for individuals, and $14,570 for couples. All incomes are adjusted to 2010 dollars. SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
beneficiaries (15 percent and 18 percent, respectively). In 2030, as in 2010, black and Hispanic beneficiaries are projected to have significantly lower incomes than white beneficiaries. About 40 percent of black and Hispanic beneficiaries are projected to live on incomes below twice the poverty level in 2030, compared to 22 percent of white beneficiaries.
Medicare Beneficiaries by Poverty Level, by Race/Ethnicity, 2010 and 2030
Page 2 Projecting Income
and
Assets: What Might
the
Future Hold
for the
Projecting the Income and Assets of Medicare Beneficiaries Next Generation
of
Medicare Beneficiaries?
2
K A I S E R FA M I LY F O U N DAT I O N
Medicare Policy
Data Spotlight
Half of all Medicare beneficiaries have less than $2,100 in retirement account savings (such as IRAs), and half of all Medicare beneficiaries have less than $31,000 in other financial assets (such as savings accounts, bonds and stocks). In 2010, about half (53 percent) of Medicare beneficiaries had a retirement account and nearly seven out of eight (88 percent) had positive financial assets, such as cash, stocks, and bonds. Across all beneficiaries, including those without these assets, half of all Medicare beneficiaries had less than $2,100 in retirement accounts and $31,000 in financial assets, and less than $53,000 in total savings. More than one‐quarter had less than $10,000 in total savings (retirement accounts and financial assets combined). As is the case with income, the distribution of Medicare beneficiaries’ assets is highly skewed. In 2010, five percent had more than $1,000,000 in retirement accounts and financial assets combined, and ten percent had more than $566,671 in total savings. Distribution of Financial Assets and Retirement Account Holdings Among Medicare Beneficiaries, 2010
Share of Medicare Beneficiaries
50%
25th
Percentile
Median value
()
75th
Percentile
95th
Percentile
Mean value
( )
$196,251
$40,228
Retirement Accounts
40%
$0
$2,095
$41,465
Financial Assets
$3,018
$30,287
$136,853
$891,949
$216,436
Total Savings
$8,308
$52,793
$207,062
$1,048,956
$256,665
30%
20%
Financial Assets
10%
Retirement Accounts
0%
,000
$0
$50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000
Asset Value
SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
White Medicare beneficiaries have significantly more in savings than black or Hispanic beneficiaries; the gap in savings is projected to widen by 2030. The vast majority of Medicare beneficiaries in 2010 (91 percent) had some savings in either a retirement account or other financial assets, but a smaller share of black and Hispanic beneficiaries (79 percent of blacks and 78 percent of Hispanics) had savings than white beneficiaries (95 percent). The share of beneficiaries with savings is projected to increase between 2010 and 2030, reflecting the rising prevalence of retirement accounts among today’s workers. Despite modest gains in the share of black and Hispanic beneficiaries with savings over the next two decades, savings accounts are projected to be more prevalent among the next generation of white beneficiaries than among black or Hispanic beneficiaries. Average Combined Value of Financial Assets and Retirement Account Holdings of Medicare Beneficiaries, by Race/Ethnicity, 2005 – 2030 Average Financial Asset and Retirement Account Value (in 2010 dollars)
$500,000
$471,353 White
$400,000
$386,559 $300,000
$200,000
$100,000
$0
Total
$248,371 $215,147 $143,639 Hispanic
$68,859 $101,148 Black
$40,115 2005
2009
2010
2014
2015
Year
2019
2020
2024
2025
2029
2030
In 2010, white beneficiaries had significantly more in savings ($299,388 on average) than black or Hispanic beneficiaries (averaging $48,872 and $81,394, respectively). The savings gap is projected to widen by 2030. White Medicare beneficiaries are projected to have $471,353 in savings in 2030, more than four times the average savings projected to be held by black beneficiaries ($101,148) and more than three times the average savings projected to be held by Hispanic beneficiaries ($143,639). NOTE: All assets are adjusted to 2010 dollars.
SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
What Might the Future Hold for the Next Generation of Medicare Beneficiaries? Projecting Income
and
Assets: What Might
the
Future Hold
for the
Next Generation
of
Medicare Beneficiaries?
Page 3 3
K A I S E R FA M I LY F O U N DAT I O N
Medicare Policy
Data Spotlight
The average value of home equity was substantially higher for white than for black or
Hispanic beneficiaries in 2010; these differences are projected to persist for the next decades.
Average Value of Home Equity Among
Medicare Beneficiaries, by Race/Ethnicity, 2005 – 2030
Average Home Equity Value,
Among Those with Home Equity (in 2010 dollars)
$250,000
$207,337
$200,000
White
$150,000
$190,278
Total
$118,399
$141,888
Among Medicare beneficiaries with home
equity, the average home equity is projected
to grow from $132,322 in 2010 to $190,278
in 2030, after adjusting for inflation. A larger
share of white beneficiaries than black or
Hispanic beneficiaries had home equity in
2010 (81 percent, 65 percent, and 57 percent,
respectively), but even among home owners,
home equity among white beneficiaries is
projected to grow more rapidly than among
black or Hispanic beneficiaries.
Hispanic
Among homeowners, the average value of
home equity among white beneficiaries is
$72,591
$50,000
projected to grow from $138,418 in 2010 to
$207,337 in 2030 (2 percent average annual
growth rate). In comparison, the value of
$0
2009
2014
2019
2024
2029
2005
2010
2015
2020
2025
2030
home equity is projected to grow from
Year
NOTE: All assets are adjusted to 2010 dollars.
$79,221 in 2010 to $96,345 in 2030 (1
SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2011.
percent average annual growth rate) among
black Medicare beneficiaries, and from $104,442 in 2010 to $141,888 in 2030 (1.5 percent average annual growth rate)
among Hispanic beneficiaries.
$100,000 $114,136
$87,246
Black
$96,345
Conclusion
While a small share of the Medicare population lives on relatively high incomes, most are of modest means, with half of
people on Medicare living on less than $21,000 in 2010. The typical beneficiary has some savings and home equity, but
asset values are highly skewed and are significantly higher for white beneficiaries than for black or Hispanic
beneficiaries. The income and assets of Medicare beneficiaries overall are projected to be somewhat greater in 2030
than in 2010; yet, only a minority of the next generation of beneficiaries will have significantly higher incomes and assets
than the current generation, with much of the growth projected to be concentrated among those with relatively high
incomes. Racial disparities in both income and assets are projected to persist for the next decades.
As policymakers consider options for decreasing federal Medicare spending and addressing the federal debt and deficit,
this analysis raises questions about the extent to which the next generation of Medicare beneficiaries will be able to bear
a larger share of costs.
Methodology
Asset and income projections are based on the Urban Institute’s Dynamic Simulation of Income Model (DYNASIM3). DYNASIM3 starts with a selfweighting sample of 103,072 individuals from the 1990 to 1993 panels of the Survey of Income and Program Participation (SIPP) and ages this
starting sample in yearly increments to 2085 using parameters estimated from longitudinal data sources. The model integrates many important
trends and differences among groups in life course processes, including birth, death, schooling, leaving home, first marriage, remarriage, divorce,
disability, work, retirement, and earnings. Projections of fertility, disability, mortality, net immigration, employment, average earnings, and price
changes are aligned to be consistent with 2009 OASDI Trustees projections. Projections of assets are aligned to the Survey of Consumer Finance
(SCF) through 2007. For a fuller description of DYNASIM3, see Melissa M. Favreault and Karen E. Smith. 2004. “A Primer on the Dynamic Simulation
of Income Model (DYNASIM3).” Discussion Paper, the Retirement Project, The Urban Institute.
Prepared by
Karen Smith of the Urban Institute; and Gretchen Jacobson, Jennifer Huang, and Tricia Neuman of the Kaiser Family Foundation
This publication (#8172) is available on the Kaiser Family Foundation’s website at www.kff.org.
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