Posts Tagged "poor"

Low-Income Retiree Gets Financial Coach

Every state should have what Delaware has: a program that helps low- and moderate-income seniors find a financial survival strategy.

Stand by me logoSince it opened in 2013, the program, Stand by Me 50+, has connected more than 2,300 older residents – mostly retirees – with federal and state aid programs, advised them of Social Security’s rules, and helped them pay medical bills or eliminate debt. The services are free.

Kathleen Rupert, a financial coach and head of the organization, helped one man in his 70s pay off $13,000 in debt. Another retiree doubled his income from Social Security after she determined that he was eligible for his late wife’s $1,700 benefit. About 44 percent of the program’s clients have monthly income of $1,500 or less.

“We go wherever the need is – to senior housing, senior centers, community centers, libraries,” she said. “We set up appointments at Panera Bread or Hardee’s – wherever they’re available.”

Squared Away interviewed three clients who said the financial solutions they got from the program have given them peace of mind. Here is the first client’s account of how Stand by Me 50+ helped her.

Peggy Grasty with great granddaughters, Aaliyah Gale and Quamiylah Sease.Peggy Grasty with great granddaughters, Aaliyah Gale and Quamiylah Sease.

Peggy Grasty retired in 2010 after two decades at Elwyn, a non-profit social services agency where she was a supervisor and worked with people with mental disabilities. She continues to help people – voluntarily. The 71-year-old takes other retirees under her wing who need assistance because they have trouble walking or aren’t as capable as her.

She initially contacted Stand by Me because she couldn’t make ends meet. She has a comfortable, federally subsidized apartment in Wilmington, Delaware. But her income is limited to a $1,500 Social Security check and a $53 pension from a job long ago waxing floors and driving a bus for a Pennsylvania middle school.

Stand by Me got help for Grasty through two programs: federal SNAP food stamps and a Delaware non-profit that pays low-income residents’ medical bills. By doing this type of work, the program addresses a real need. Although myriad financial assistance programs are available for low-income workers and retirees, they are frequently unaware of the programs, assume they don’t qualify, or may need help navigating the application process. …Learn More

Low-income Spend Tax Credit on Food, Rent

The fate of the recent expansion of the federal child tax credit is uncertain in the ongoing budget negotiations in Congress. What is clear is that poor and low-income families are putting the increased assistance to good use.

Low-income families figureNine out of 10 families earning less than $35,000 are spending the money on one or more essential living expenses, which include food, utilities, housing, clothing or education needs like books and after-school programs, according to an analysis of U.S. Census data by the Center on Budget and Policy Priorities.

The American Rescue Plan passed in March temporarily increased the credit from $2,000 to $3,600 per year per child for kids under age 6 and to $3,000 for older kids and teenagers. In another temporary provision in the legislation, the IRS sends the credit to families every month in the form of a monthly payment.

The child tax credit is also now fully refundable, which means that low-income people are eligible for the full credit even if they pay little or no income taxes. If the budget negotiations make this a permanent feature of the credit, the IRS would extend the federal assistance to 27 million more children in low-income families.

Unfortunately, the center estimates, there are some 4 million children in families with very low incomes that aren’t receiving the monthly payments, either because they didn’t file taxes in 2019 and 2020 or didn’t receive an economic relief check from the federal government. The IRS has created an online tool for parents to sign up and start receiving the credit.

The Center on Budget and Policy Priorities asked the people it surveyed about their specific uses for the monthly cash payments. Six out of 10 families earning under $35,000 said they are spending the money on food. About half are paying their utilities or housing expenses. Even the non-essential expenses seem like good uses for the extra funds, including car payments, childcare, and paying down debt.

Higher-income families also buy necessities with the extra cash. But low-income families struggle more to pay for their basic living expenses, and the center said they are using more of the money from the tax credit to pay for them. …Learn More

Federal Aid May Help Kids Later in Life

Handicapped student in the library President Biden has said he wants to increase the benefits in a federal program for low-income children and adults with disabilities. But a long-running debate about the program is whether the direct cash assistance helps children when they grow up.

The Supplemental Security Income program, or SSI, clearly has immediate benefits. SSI provides nearly $800 in monthly cash payments and Medicaid health insurance to help parents care for their children and teenagers and manage their physical, cognitive, or behavioral disabilities. However, policy experts disagree on the program’s long-term effects.

Critics say it creates a negative dynamic if it causes poor parents, consciously or unconsciously, to lower their expectations for a child in order to preserve the payments. If the child has a relatively mild disability, the stigma might discourage educational achievements that would ultimately boost his earnings potential as an adult.

However, one analysis in a new study found no evidence that the future earning power of children receiving SSI was affected. This analysis compared kids whose benefits started before and after a 2001 administrative change that led to more benefit terminations.

A second analysis supported the argument made by SSI’s proponents that the program has broader long-term benefits for children. The additional financial resources enable parents to provide more of the educational experiences, nutritious meals, or stable home life that can improve their children’s future prospects.

To assess the merits of this long-term benefits story, the researcher used a different, more indirect approach. This approach was based on a medical exam for 18-year-old SSI recipients that was introduced in 1996 to determine whether their benefits would continue. The researcher compared the future earnings of the younger siblings in poor families in which the 18-year-olds did and did not lose their benefits.

When the 18-year-olds retained their SSI benefits, their younger siblings earned more as adults than the younger siblings in families that had lost benefits. This pattern held true both for the younger siblings who received SSI themselves and for the siblings who did not receive SSI. …Learn More

Bars of gold

Billionaires Got Much Richer in Pandemic

In the COVID-19 downturn, this blog has had a steady supply of stories and statistics about the damage being done to low-income and middle-class families.

That’s one perspective on the pandemic. The growing billionaire class is another one.

Top 10 US billionairesSince last March, the nation’s 660 billionaires have added more than $1 trillion to their wealth – a 39 percent increase. Their combined net worth is now $4 trillion, which is nearly double the $2 trillion held by the 165 million Americans in the bottom half, according to the Institute for Policy Studies’ new report.

“It’s a troubling sign that too much of society’s wealth and income is flowing upwards to that small group of people,” Chuck Collins of the Institute for Policy Studies said during an interview on NPR’s Fresh Air.

The institute’s report is based on Forbes magazine’s annual estimates of the net worth of the world’s richest people.

Inequality has always been with us, but economists say it has grown as billionaires’ wealth has hit stratospheric levels.

To be sure, inequality would’ve been worse without the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $500 billion in direct assistance to families last spring prevented a surge in poverty, and the relief bill passed in late December is sending more aid to unemployed and under-employed people who need it.

The billionaires are getting richer for a couple reasons, starting with a surprisingly strong stock market in 2020. Despite the worst public health crisis in a century and a struggling economy, the Standard & Poor’s 500 stock index shot up 18 percent.

But some billionaires were also in the right place at the right time – a pandemic. …Learn More

Cash from Kids Slows After Parents Retire

Family laughingIt’s not unusual for workers who grew up in lower-income households to help their parents out financially.

But a new study uncovers a twist in this familiar story: once the parents are old enough to collect Social Security, the money flowing from adult child to parent slows down. And when this occurs, the offspring are able to start saving money.

Social Security, by reducing disadvantaged parents’ reliance on their children, “may be able to interrupt the cycle of poverty between generations,” Howard University researcher Andria Smythe concluded from her analysis.

To chart changes over time in cash transfers within families, Smythe followed U.S. households’ finances between 1999 and 2017 using survey data from the Panel Study of Income Dynamics.

She found that the financial support going to parents in the bottom half of the U.S. income distribution was substantial. These parents received about $8,000 from their offspring over time. In contrast, among the higher-income families, money consistently flowed in the opposite direction – from parent to child.

After the lower-income parents turned 62 and started their Social Security, the likelihood the adult children would continue to support them declined, according to the study, which was conducted for the Retirement and Disability Research Consortium.

This, in turn, had a positive effect on the adult children’s wealth. People who grew up in lower-income families saw the biggest bump in wealth, adding about $13,000 in the years after their parents turned 62.

Social Security benefits, Smythe concludes, “may contribute to wealth-building among the adult children’s generation.”

To read this study, authored by Andria Smythe, see “The Impact of Social Security Eligibility on Transfers to Elderly Parents and Wealth-building among Adult Children.”Learn More

Art of a light bulb

Electric Bills and Financial Survival

Timing is everything for low-income people who rely on federal benefits to survive.

For example, retirees who receive their Social Security checks early in the month and spend the money before the bills come in are more prone to fill the gap with high-cost payday loans than people who get their checks a few weeks later, a 2018 study found. New research in a similar vein shows that timing also matters for individuals who receive food aid under the federal Supplemental Nutrition Assistance Program, or SNAP.

SNAP program logoWhen the electricity bill arrives on or within a day of the monthly SNAP benefit, the lowest-income customers in this study were much less likely to have a past due bill or to have their power cut off than customers whose bills arrive well after their benefits.

The timing is crucial, because SNAP supplies between 10 percent and 25 percent of household incomes up to 35 percent above the federal poverty level. When the government loads each month’s food benefit onto the card, it frees up money for high-priority bills coming due at the same time, including utilities.

This study took place in an unidentified New England state where recipients’ SNAP debit cards are refilled on the first day of every month.

After following the SNAP recipients for a full year, the researchers also found that the unpaid balances they had accumulated after 12 months were smaller if the bills coincided with the SNAP-card deposits. The advantages of a well-timed electricity bill were greatest in the poorest neighborhoods, the researchers said. …
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Illustration of slum and hospital

Financial Survival of Low-Income Disabled

A monthly disability check from the federal government is a lifeline for poor and low-income persons with disabilities, but they still face a daily struggle to meet their basic needs and cover their expenses.

In in-depth interviews, 35 low-income people in Worcester, Massachusetts, described how they make ends meet on the disability benefit they get from Social Security, which averages $912 a month and is their largest source of income. Another $300 comes from other forms of public assistance, family support, or minimum-wage jobs, according to a new issue brief by Mathematica’s Center for Studying Disability Policy.

The daily struggles that each individual faces are as unique as they are. Here are a few excerpts from the study:

“My rent is subsidized. Plus I work 20 hours a week which is pretty good. I bring home more than one hundred something dollars a week and I get a few dollars in food stamps. So it’s okay.”

“I’m stringing it, managing it, and just barely staying above water. I’ve been treading that water for a long time.”

“My situation is challenging. I sometimes just don’t have enough coming in to make what’s going out.”

Three out of four people in the study told interviewers that they find it very difficult to pay for their housing, food and other basic expenses. A bright spot is that people on federal disability insurance (DI) are also covered by Medicare and/or Medicaid and spend very little on medical care.  “I’m getting everything I need,” one individual said about her healthcare. …Learn More