Financial Pressures Erode Affordability for Low-Income Older Adults

A new report from the AARP Public Policy Institute (PPI) examines spending patterns and affordability challenges in households with low-income older adults.

Examining data from the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, the researchers identify key drivers and financial pressures that are making it harder for millions of older adults to live with health and financial security.

Low-Income Older Adults Spend Significantly to Meet Basic Needs

In low-income 50+ households, basic needs account for over 80% of all spending—housing (36%), food/groceries (20%), transportation (15%), and health care/insurance (12%). The remainder goes to other goods and services.

These households spend larger shares of their budgets on basic needs than higher-income 50+ households do (83% vs. 73%). This is especially true for housing and food costs, which account for about 56% of spending in low-income 50+ households and only 46% in 50+ households overall.

Housing and food costs account for about 56% of spending in low-income 50+ households and only 46% in 50+ households overall.

They also face a high health care cost burden, compared to other 50+ households (12% vs. 10%) and to low-income households without an older adult (12% vs. 3%).

Spending Growth Is Outpacing Income

Low-income 50+ households spend much more on basic needs than they did 20 years ago. Even after adjusting for inflation, expenses have risen sharply for food (27%), health care (17%), and housing (15%).

And incomes are not keeping pace. Over the last two decades, even though average post-tax income among low-income 50+ households grew slightly (from about $18,600 to $21,300, a $2,700 increase), average annual expenses grew faster—from about $27,600 to $36,100 (an $8,500 difference).

The authors note that previous research suggests many are filling the gap between income and expenditures by drawing down savings, falling behind on bills, and racking up debt.

Implications of the Financial Squeeze

Many older adults have few resources. In 2024, one in four Medicare beneficiaries (16.5 million people) had income below $24,600 and one in ten had no savings or were in debt.

In 2024, one in ten Medicare beneficiaries had no savings or were in debt.

Many rely heavily on Social Security to stay afloat. In 2025, for 55% of Medicare enrollees, Social Security (about $20,000 a year) represented at least 75% of their income. And Medicare Part B and D costs accounted for nearly one-fourth of those monthly benefits, on average. These constraints can make it difficult to save for the future or absorb rising costs.

Yet, costs continue to climb. For example, as AARP PPI notes, “Between 2020 and 2026…average rents rose by 35 percent and average monthly grocery prices rose 33 percent.” The ever-widening gap between household expenses and income creates financial pressures and impossible, consequential choices—like trade-offs between going to the grocery and going to the doctor. People who cannot afford to build or maintain their health, or to get care when they need it, may experience worse outcomes that put their well-being and independence at risk. There is also a systemic cost. Forgoing treatment can lead to health declines and the need for more expensive interventions later.

Constraints on Affordability Programs Limit Reach and Impact

These dynamics underscore the importance of federal and state programs that improve affordability. For example, the Medicare Savings Programs (MSPs) provide a financial lifeline for low-income Medicare enrollees by paying their Medicare Part B premiums ($202.90 per month in 2026) and enrolling them in Extra Help, the federal prescription drug subsidy program that the Social Security Administration (SSA) estimates is worth about $5,700 per year. Combined, these programs save enrollees an estimated $8,000 annually, allowing them to maintain Medicare coverage, fill their prescriptions, and better pay for daily living expenses like food and housing.

An estimated 40% of those who are eligible are missing out on important MSP benefits.

Despite the need for and importance of MSPs, administrative barriers that complicate enrollment, as well as overly strict eligibility limits, keep MSPs consistently underenrolled; an estimated 40% of those who are eligible are missing out on important MSP benefits. The Medicare Rights Center continues to urge policymakers to ease state and federal barriers to MSP access.

Other critical programs—Medicaid and SNAP—can also help. But they are facing significant headwinds due to changes in H.R. 1 that threaten to strip health coverage from millions, worsen poverty, and deepen food insecurity. Older adults, people with disabilities, children, and families with low incomes are among those most at risk as these policies are fully implemented. The Medicare Rights Center remains committed to mitigating and reversing these harms.

Older adults, people with disabilities, children, and families with low incomes are among those most at risk as these policies are fully implemented.

Read the AARP PPI report, Spending More on Necessities: Patterns Among Low-Income Older Households.