In Germany, the current poverty rate among the elderly is not very high compared to the general population. Yet experts expect this situation to change in the near future. For many, the result could well be a return to poverty in later life. Given that German society is steadily aging as a result of demographic change, this issue requires foresight and hard data.
Return to poverty among the elderly?
Many studies, especially those examining Germany as a whole or its individual states, show that the poverty rate is not particularly high when compared to the general population. Yet experts expect this to change in the near future, and the result could well be a return to poverty among older people. There is already wide-spread consensus that the number of seniors at risk of living in poverty will increase in the future.
Poverty among the elderly varies from region to region. Until now, statistics have only been available for Germany’s individual states. A general overview and an analysis of the situation at the community level are still missing.
How is poverty defined?
Poverty among the elderly can be defined in a number of ways. Empirical findings on its future growth in Germany are not uniform, since they depend on varying definitions of poverty among the elderly and the underlying datasets. One possible definition would be all people over the age of 65 who receive basic social security benefits based on the Germany’s SGB XII social code.
Researchers now typically speak of “poverty” when equivalence-weighted net household income falls below 60 percent of median income. Yet the rates based on basic social security benefits and on income distribution differ considerably:
A regional analysis of poverty among seniors
On behalf of the Bertelsmann Stiftung, researchers at Ruhr-Universität Bochum are examining poverty among the elderly in Germany by investigating how it is influenced by social structures and regional factors. The researchers are analyzing:
1. How poverty among the elderly is developing at the local level throughout Germany over time and how poverty rates correlate to other aggregate socio-structural characteristics (e.g. social assistance rate, unemployment rate, age structure, share of immigrants, average benefit payment, etc.).
2. The extent to which income poverty is determined on the micro level (using data from the Microcensus) among people over 65 years of age according to socio-demographic characteristics (e.g. gender, age, ethnic background, marital status, educational level, most recent occupation, etc.), household-related variables (e.g. life partner, children or grandchildren in the household, living situation, etc.) and contextual variables (e.g. unemployment rate and social assistance levels at the local level).
Development of poverty among the elderly
The number of people over 65 receiving basic social security benefits has risen significantly in recent years. In 2012, 465,000 people over 65 in Germany (2.7 percent) received basic social security benefits, which is 6.6 percent more than the year before (436,000) and 13.4 percent more than in 2008 (source: German Federal Statistical Office). 14.3 percent of the population over 65 can be described as income poor.
Causes of poverty among the elderly
There are various causes of poverty among older people.
The economic situation of Germany’s retirees is largely determined by the regular pension payments they receive and any adjustments to pension payments that are approved. Personal provisions for old age and personal wealth play a minor role and are usually only meaningful for people who receive larger pension payments. Therefore, one expects that people with below-average income at the age of retirement will experience poverty in later life (a more or less permanent situation). Incomplete or fragmented work histories and part-time or temporary employment are generally seen as a cause of poverty in the senior population, since this means less money has been paid to government pension programs and lower payments can be expected when participants retire. In addition, the risk of poverty depends on the household itself, elderly couples are less affected by poverty than elderly individuals living alone. This difference can generally be explained by redistribution processes taking place within the home. A steady increase in single-person senior households, as officially documented and forecast (German Federal Statistical Office 2011), must also be seen as a reason to expect higher poverty levels among the elderly in the future.
Women are not the only ones threatened with poverty in old age because of fragmented work histories (which often result from taking time off to raise children or care for family members). Full-time employees who have paid into statutory pension programs over the course of their entire working lives are also at risk in later years if the payments they receive after retiring are not high enough to keep them out of poverty.
In addition to the impact of gender-related occupational differences, retirement payments can vary considerably by region even when the individuals in question have retired from the same occupation and had a similar level of training. As a result, people living in economically weaker areas sometimes receive a significantly lower amount on a gross monthly basis than the average for the state as a whole.
The study on poverty among the elderly is expected to be completed by October 2015. However, the project will continue to focus on the issues of poverty and social deprivation.