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Income and Assets of Medicare Beneficiaries, 2013 – 2030

Income of Medicare Beneficiaries

In this analysis, the income of the Medicare population takes into account Social Security, pensions, earnings, and other income sources, including income from assets, rental income, and retirement account (IRA) withdrawals. Income is presented on a per person basis; for married people, income is divided equally between spouses to calculate per capita income. Projected growth in income is adjusted for inflation and all dollar amounts are in 2013 per capita dollars.

In 2013

Half of all Medicare beneficiaries had incomes below $23,500 in 2013, but incomes varied substantially among beneficiaries (Exhibit 1).  One-quarter of beneficiaries had incomes below $14,400, while at the other end of the distribution, five percent had incomes exceeding $93,900, including one percent who had incomes exceeding $171,650 in 2013.

Exhibit 1. Half of all Medicare beneficiaries had incomes below $23,500 per person in 2013

Exhibit 1. Half of all Medicare beneficiaries had incomes below $23,500 per person in 2013

Incomes among beneficiaries varied across demographic characteristics (Exhibit 2).  Median per capita income was substantially higher for white beneficiaries ($26,400) than for black beneficiaries ($16,350) or Hispanic beneficiaries ($13,300).  Across all ages, median per capita income was lower for beneficiaries under the age of 65 with permanent disabilities ($17,200); for seniors, median income declines with age.  Among beneficiaries ages 85 and older, more than half lived on an income of less than $18,000 in 2013.  Married individuals had higher median per capita incomes ($27,400 per beneficiary) than divorced, widowed or single beneficiaries ($20,250, $21,050, and $14,150, respectively) in 2013. As might be expected, median income varied by years of education, and almost three times higher among beneficiaries with college degrees ($41,300) than among beneficiaries with less than a high school education ($13,900) in 2013 (Table 1).

Exhibit 2.  Median per capita income among Medicare beneficiaries varies by beneficiary characteristics in 2013

Exhibit 2. Median per capita income among Medicare beneficiaries varies by beneficiary characteristics in 2013

In 2030

Per capita income among the Medicare population will be moderately higher in 2030 than it is today, after adjusting for inflation; however, much of the growth is projected to be in the upper incomes (Exhibit 3).  Incomes are projected to be 19 percent higher for beneficiaries in the top five percent of the income distribution in 2030 compared to the current generation, an increase of about $18,000 between 2013 and 2030, after adjusting for inflation. In contrast, per capita income for beneficiaries in the bottom quartile of the income distribution are projected to be 14 percent higher in 2030, an increase of about $2,000, after adjusting for inflation.  In 2030, twenty-five percent of beneficiaries are projected to have incomes below $16,400 and about half will have incomes below $28,250.  Ten percent of beneficiaries are projected to have incomes above $84,100 and five percent are projected to have incomes above $111,900 in 2030, after adjusting for inflation.

Exhibit 3.  Growth in per capita income is projected to be concentrated among beneficiaries with higher incomes

Exhibit 3. Growth in per capita income is projected to be concentrated among beneficiaries with higher incomes

Introduction Savings of Medicare Beneficiaries