Aging California’s Retirement Crisis: State and Local Indicators

Nina Ebnerand Nari Rhee

Press Coverage


Executive Summary

With the senior population expected to grow by nearly two-thirds in the next two decades, and most workers unprepared for retirement, California faces a mounting retirement crisis. While the retirement crisis is national in scope, California seniors face high costs of living and the state ranks near the bottom in workplace access to a pension or 401(k). Absent policy action to improve old-age financial security for today’s workers and sustain quality of life for the aging population, the ranks of California’s impoverished elderly will swell rapidly over the next two decades and beyond.

This report outlines key retirement security indicators—focused on demographics, income and poverty, and housing and supportive services—for California as a whole, and at the regional level. For the purposes of this study, the state is divided into seven regions: (rural) Northern California, Central Valley, Sacramento, Bay Area, Central Coast, Los Angeles, and San Diego. Our analysis draws primarily on state demographic projections, Census data, and state administrative data.

The purpose of this study is two-fold. First, it is intended to outline important statewide and regional trends in aging, senior economic security, and selected public resources for the elderly. Second, these measures will serve as a benchmark against which to measure the results of policy interventions in the future.

Our findings indicate that California’s seniors are already struggling to meet basic needs, and a large majority of the elder population in 2035 will consist of groups that are already economically vulnerable: the oldest seniors, older women, and seniors of color. And while all regions in California will be affected, some will face greater challenges based on the magnitude and makeup of senior population growth. The following are key findings:

1. California faces a rapidly growing and increasingly vulnerable senior population. The fastest growing groups of seniors are age 80 and older, Latinos, and Asians. In addition, women will continue to make up a majority of seniors. These are the very populations that tend to have fewer resources in retirement.

» By 2035, the senior population in California (age 60 and older) will have increased 64%, to 12.0 million, from 7.3 in 2015. The senior share of state population will increase from 19% to 26% over the same period.

» The oldest group of seniors—those age 80 and up—comprise the fastest growing age group within the senior population, and will more than double in size over the next two decades.

» People of color will make up a majority (55%) of California’s senior population by 2035, compared to 41% today. Latinos and Asians make up the fastest growing racial-ethnic group.

  • Latinos as a share of the senior population will grow from 21% in 2015 to 33% in 2035.
  • The Asian senior population will grow from 15% to 17% of the state total.
  • The share of the state’s senior population made up by whites will shrink from 59% to 45%. The share comprised by Black seniors will also drop, from 6% to 5%. However, both groups will grow in absolute number.
  • Households of color reach retirement with significantly less wealth than white households, due to lower access to workplace retirement plans, less secure employment, lower Social Security coverage among immigrants, and significantly less financial wealth.

» Most seniors are women, who represent a larger share of the older senior population groups (age 70 and up). Women tend to accumulate less retirement wealth than men because of lower earnings and careers shortened by caregiving responsibilities, and are more likely to be single or widowed in old age.

2. Three out of ten of seniors in California do not have enough income to cover their basic needs.

» Almost a third (29%) of the California seniors live below 200% of the Federal Poverty Level (200% FPL). A broadly accepted measure of economic hardship in high-cost states like California, 200% FPL is equivalent to $23,540 for a one-person household and $31,860 for two people in 2015.

» California seniors have an average (median) personal income of $21,300.

  • Seniors in the Central Valley and the Los Angeles region have the lowest median personal
    incomes, falling below $20,000.
  • Almost two out of three California seniors age 65 and older (57%) depend on Social Security for at least half of their annual income. The average annual Social Security benefit, among beneficiaries, is approximately $12,000.
  • Less than half of senior-headed households in California have retirement income (i.e., income from retirement assets such as a pension, 401(k), or IRA).

» 28% of California seniors have incomes that are below the estimated amount a senior would need to meet their basic needs, as measured by Elder Economic Security Standard™ Index (Elder Index) created by Wider Opportunities for Women and the Gerontology Institute at the University of Massachusetts Boston.

» One out of four (26%) senior households face a housing cost burden—i.e., spend more than 30% of their income on housing. The number of such households in California, 935,000, is about 25 times the number of affordable, subsidized housing units available to seniors.

3. Older seniors, seniors of color, older women, unmarried seniors, and renters are more likely to be poor and to struggle to meet their basic needs.

» Older seniors are the most likely to be poor: 36% of the oldest seniors (age 80 and older) have incomes below 200% FPL, versus 25% of younger seniors (age 60-69).

» Women, who make up 55% of seniors, have lower incomes and are more likely to live in poverty compared to older men.

  • 32% of senior women are have incomes below 200% FPL, compared to 26% of senior men. Among the oldest seniors (80 and older), 40% of women are poor, compared to 31% of men.
  • The average female senior has half as much income as the average male senior ($15,500 vs. $31,000).
  • Older women are one-third less likely to be employed compared to older men (22% vs 32%).

» Seniors of color are much more likely to live in poverty than white seniors in California, and have half the income.

  • Latino seniors, the fastest growing segment of the senior population, are almost three times
    as likely to be poor—with incomes below 200% FPL—as white seniors (44% vs. 23%).
  • Asian and Black seniors are also significantly more likely to live in poverty than white seniors (32% and 37% vs. 23%).
  • Asian and Latino seniors have the lowest average incomes ($11,200 and $12,800, respectively),compared to white seniors ($28,000).
  • With an average income of $21,500, Black seniors have one-fourth less income than white seniors.

» Senior renters—whether married or single—tend to struggle financially; 50% and 57%, respectively, do not have enough income to meet their basic needs as measured by the Elder Index.» Married senior homeowners are more financially secure. Nonetheless, 13% have insufficient income to meet their basic needs.

4. Certain regions face greater challenges with their aging population, but no region is exempt from the retirement crisis.

» The Los Angeles region and the Central Valley, which will experience the largest senior population growth in the state, face particularly severe challenges in retirement security.

  • Respectively, 32% and 34% of seniors in these regions live below 200% FPL—representing the highest poverty rates in the state. In both regions, nearly one out of 3 seniors (31%) do not have enough income to meet basic needs as established by the Elder Index.
  • Seniors in Los Angeles and the Central Valley have the lowest median annual incomes in the state, $19,000 and $18,800, respectively.
  • Los Angeles has the largest share of seniors living alone.

» No region is exempt from the retirement crisis. For example, while elder economic security indicators are generally better than average for Sacramento than for the state as a whole, one in four seniors in the region (25%) have incomes that fall below 200% of the Federal Poverty Level and almost 27% cannot afford to meet their basic needs as defined by the Elder Index. In addition, Sacramento faces the fastest growth rate for seniors age 80, the group most in need of supportive services.

  • Across the state, the demand for adequate housing, healthcare and supportive services for seniors is expected to increase dramatically over the next two decades and beyond. This requires an evaluation of the adequacy of public and private resources, services and income for the economic security of current and future California seniors. Reducing economic inequality and poverty amongst seniors and workers, improving opportunities for low- to moderate-income families to build financial assets, and enhancing training and compensation for care workers will contribute to the long-term economic health of the state, as well as the regions. Furthermore, regional indicators of elder security can assist policymakers and stakeholders in identifying successful local policies, in arenas such as healthcare and housing, that might be replicated elsewhere.