Consumers' wallets are being squeezed by inflation, and senior Americans on fixed incomes are the most affected.
Prices have soared across the U.S. as a result of supply chain problems, the Russian invasion of Ukraine, and soaring demand for goods. The consumer price index report (CPI) from the Bureau of Labor Statistics (BLS) shows that prices for goods and services increased by 7.9% in February compared to the same month last year.
The already meager fixed incomes that many senior citizens depend on take a massive hit from this hike. According to the Social Security Administration, the average Social Security payment for retirees is anticipated to be $1,657 — and that's after an unusually large COLA rise. That means that the largest source of income for many of the nation's seniors annually was just under $20,000.
As a result, many elderly people find it difficult to make ends meet. According to a 2021 research from the Congressional Research Service, 8.9% of seniors had incomes that were below the poverty line in only 2019. Their already restricted incomes are now getting squeezed by record-high inflation.
As such, it is crucial for the government to step in and provide much-needed assistance to senior citizens. There are many government benefits for seniors over 55 to help with essential expenses, such as housing, medication, food, and energy. Not to mention, there are also numerous financial assistance programs to provide money for seniors and offer an extra hand to cover their basic needs.
To find out more, continue reading our guide to financial assistance programs for seniors below.
General Financial Assistance Programs
These free government programs for seniors offer monthly stipends based on varying financial criteria.
Every American worker's retirement plan includes Social Security. It provides qualified retirees and their families with replacement income. The Social Security program provides services to a wide range of groups, such as the seniors, the disabled, spouses and minor children of retirees, and spouses and minor children of deceased workers. Each group receives a significantly different amount. The average monthly pension for a retired worker is $1,669.44, which is equivalent to $20,033.28 per year. Any expenses you have can be paid for with your Social Security payment.
As of June 2022, the figures are broken down by recipient as follows:
|Type of Beneficiary||Percent of Total Payouts||Average Monthly Benefit|
Social Security imposes specific requirements for the financial aid for senior citizens. They should be at least 62 years old and have worked at least 10 years in order to be eligible to receive their Social Security benefits. Free benefits for seniors make up the vast bulk of Social Security, which is 77.2% with most of it going to retired workers.
Although the Social Security income provides free money for seniors, if it remained the same for the following 30 years, inflation would reduce its purchasing value. That said, Social Security gradually raises benefit payments through a cost of living adjustment or COLA. The COLA increases correspondingly with the inflation rate in every given year. However, increases are only increments.
Supplemental Security Income (SSI)
The government program called Supplemental Security Income (SSI) is supported by U.S. General Treasury Funds. It is run by the U.S. Social Security Administration (SSA), but it is not funded by Social Security taxes. It is intended to provide free benefits to seniors who have limited to no income; and provide financial aid for senior citizens to be able to cover essential expenses, including food, clothing, and housing. The SSI offers much-needed additional help for seniors on social security. Nonetheless, the SSI is also intended to help blind and crippled individuals who have limited to no income.
As of April 2022, more than 7.6 million people were receiving SSI payments, including 2.3 million seniors. To be eligible for SSI, here are a few considerations you should take note of:
- You must be disabled, blind, or at least 65 years old
- You should have very limited financial means (countable income should be less than the specified amounts)
The maximum monthly benefit from SSI in 2022 is $841 per month for a single person and $1,261 per month for a couple who are both qualified for the program. Also, Social Security deducts "countable income" from the payment, so if your countable income exceeds the values above, you are deemed ineligible for SSI.
Temporary Assistance For Needy Families (TANF)
With the support of the Temporary Assistance for Needy Families (TANF) program, states and territories can operate a variety of initiatives aimed at assisting low-income families with children to become economically independent. States use the TANF program to provide low-income families with children with monthly financial help and a variety of other services.
States can independently set their own benefit levels for the TANF. As of July 2021, a family of three may get a maximum benefit that ranged from $204 in Arkansas (11% of the poverty level) to $1,098 in New Hampshire (60% of the poverty line), with a median benefit of $498 (27% of the poverty line).
In order to be eligible for this benefit program, applicants must be residents of the state in which they submit their application — U.S. citizens, legal aliens, or qualified aliens. Applicants must also be unemployed, working part-time, or making a very modest salary. Additionally, you must also be one of the following:
- Have a child 18 years of age or younger
- Carrying a child or pregnant
- 18 years of age or younger and the head of your household
However, even seniors may qualify for TANF assistance as long as he or she is raising a grandchild on her own and has insufficient earnings. The low TANF payout levels may not be sufficient for seniors to meet all of their essential needs, but they do provide critical help for seniors on social security.
Tax Credits And Deductions For The Elderly
Tax credits are great recourses to reduce the burden of paying taxes. They directly and dollar-for-dollar lower your tax obligation. The credit for the seniors may significantly help your monthly finances if you meet the qualifications.
Credit For The Elderly And Disabled
To qualify for this tax deduction program, you must meet the following requirements:
- Aged 65 or older
- Retired on permanent or total disability and receive taxable disability income for the tax year
- With an adjusted gross income or the total of nontaxable Social Security, pensions annuities or disability income under certain limits
Generally, government money for seniors from senior tax credit typically varies from $3,750 to $7,500. It is calculated as 15% of the starting sum, less the total of any nontaxable pensions, annuities, or disability payments you have received, including social security benefits and some other nontaxable pensions.
Earned Income Tax Credit (EITC)
One of the most effective anti-poverty strategies in the nation is the Earned Income Tax Credit (EITC). Unlike the previously mentioned tax deduction program, tax credits from EITC are refundable. So if your credit exceeds your tax obligation, you will get a refund.
The eligibility for the EITC was temporarily increased in March of last year. Taxpayers aged 65 and older who earned income under $57,414 and had investment income under $10,000 during the 2021 tax year are now eligible to claim the credit on their tax return. For the 2021 tax year, the maximum credit for those without dependents was tripled, which means qualified seniors may claim $543 to $1,502 from the EITC.
Standard Deduction For Seniors
When filing their taxes, the majority of taxpayers choose the standard deduction, which automatically lowers their taxable income without claiming any itemized deductions. The standard deduction is higher for seniors aged 65 or older at the end of the tax year than for other taxpayers. For single filers in 2021, the standard deduction for seniors is $14,250.
Instead of applying the standard deduction, seniors with significant medical expenses may benefit from itemizing their deductions on their tax returns. Any medical or dental costs that surpass 7.5% of their AGI, such as insurance premiums, Medicare payments, and long-term care insurance premiums, may be written off. They also provide free medical supplies for seniors.
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