Wide Disparities in the Income and Assets of People on Medicare by Race and Ethnicity: Now and in the Future

Executive Summary

Section 1: Income

View Exhibits

1. Exhibit 1.1: Median Per Capita Income of the Medicare Population

   In 2012, half of all Medicare beneficiaries had annual incomes at or below $22,500. This includes income from all major sources, including Social Security income, pension income, earnings, Supplemental Security Income (SSI), and investment income. Median per capita income was lower for black and Hispanic beneficiaries ($15,250 and $13,800, respectively) than for white beneficiaries ($24,800) in 2012.

2. Exhibit 1.2: Distribution of Income of the Medicare Population, By Race/Ethnicity, 2012

   The distribution of income for the Medicare population differed by race/ethnicity. While the top 10 percent of black and Hispanic beneficiaries had incomes above $43,900 and $44,550, respectively, the top 10 percent of white beneficiaries had incomes above $70,000 in 2012. Similarly, while the top 1 percent of black and Hispanic beneficiaries had more than $99,900 and $101,100 in income, respectively, the top 1 percent of white beneficiaries had more than $161,900 in income (not shown).

3. Exhibit 1.3: Sources of Income of the Medicare Population, by Race/Ethnicity, 2012

   Social Security accounted for the largest source of income for all beneficiaries in 2012.  Among beneficiaries in the middle of the income distribution, Social Security accounted for a larger share of income among black (80%) and Hispanic (76%) beneficiaries than among white beneficiaries (57%).  Conversely, investment income (interest, dividends, rental income, and IRA withdrawals) accounted for a larger share of income among white middle income beneficiaries (16%) than among black (4%) or Hispanic (4%) middle income beneficiaries, and defined benefit pensions accounted for twice the share of income among white (14%) than among black (7%) or Hispanic (7%) middle income beneficiaries.

4. Exhibit 1.4: Median Per Capita Income of the Medicare Population, by Education Level and Race/Ethnicity, 2012

   Median income among people on Medicare increased with years of education, but racial/ethnic differences in median income persisted at all education levels. Among college graduates, the median income of white beneficiaries was $41,400 — nearly $7,000 higher than the median income of Hispanic beneficiaries ($34,800), and more than $12,000 higher than the median income of black beneficiaries ($29,200) in 2012.

5. Exhibit 1.5: Median Per Capita Income of the Medicare Population, by Age and Race/Ethnicity, 2012

   Racial/ethnic disparities in income were evident in all age groups, and were most pronounced among beneficiaries between the ages of 65 and 74. Among beneficiaries between the ages of 65 and 74, median income among white beneficiaries ($31,100) was about twice as high as median incomes among black or Hispanic beneficiaries ($17,550 and $14,900, respectively) in 2012. Income differences by race/ethnicity were smaller for beneficiaries under the age of 65 and beneficiaries ages 85 and older.

6. Exhibit 1.6: Median Per Capita Income of the Medicare Population, by Marital Status and Race/Ethnicity, 2012

   Median per capita income was higher among married beneficiaries ($26,500) than divorced, widowed, or single beneficiaries ($19,950, $19,200, and $13,850, respectively), with racial/ethnic differences in median income across all marital groups. Among married beneficiaries, per capita median income for white beneficiaries ($28,550) was about $10,000 higher than per capita median incomes for black and Hispanic beneficiaries ($18,550 and $15,950, respectively) in 2012. 

Section 2: Financial Assets and Savings

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1. Exhibit 2.1: Share of Medicare Beneficiaries with Savings, by Race/Ethnicity, 2012

   Nearly all (92%) Medicare beneficiaries had some savings, but rates were higher among white beneficiaries (95%) than among black and Hispanic beneficiaries (80% and 81%, respectively).  Similarly, one in 20 white beneficiaries did not have savings or were in debt, compared to nearly one in five black and Hispanic beneficiaries.

2. Exhibit 2.2: Median Per Capita Savings of the Medicare Population, Total and by Race/Ethnicity, 2012

   Half of all Medicare beneficiaries had less than $63,100 in savings in 2012.  Median savings for white beneficiaries ($85,950) were more than seven times the median savings for black beneficiaries ($11,650) and Hispanic beneficiaries ($12,050) in 2012.

3. Exhibit 2.3: Median Per Capita Savings of the Medicare Population, Total and by Race/Ethnicity, 2012

   Among beneficiaries with savings, half had less than $77,500 in savings in 2012; median savings for white beneficiaries ($95,900) were nearly five times the median savings for black beneficiaries ($19,700) and nearly four times the median savings for Hispanic beneficiaries ($25,150) in 2012.

4. Exhibit 2.4: Distribution of Savings of the Medicare Population, Among Those with Savings, By Race/Ethnicity, 2012

   The top 10 percent of black and Hispanic beneficiaries had savings above $137,200 and $215,550, respectively, while the top 10 percent of white beneficiaries had savings above $723,200 in 2012. Similarly, while the top 1 percent of black and Hispanic beneficiaries had more than $699,450 and $1,082,750 in savings, respectively, the top 1 percent of white beneficiaries had more than $3,934,650 in savings in 2012 (not shown).

5. Exhibit 2.5: Median Per Capita Savings of the Medicare Population, by Federal Poverty Level and Race/Ethnicity, 2012

   The share of beneficiaries with any savings and the median savings among beneficiaries increased with income, with large racial/ethnic differences in savings across all income levels.  Among beneficiaries who had incomes over 400 percent of the federal poverty level, median savings for white beneficiaries ($239,050) was nearly five times the median savings for black beneficiaries ($48,550) and more than three times the median savings for Hispanic beneficiaries ($71,400) in 2012.

6. Exhibit 2.6: Median Per Capita Savings of the Medicare Population, by Education Level and Race/Ethnicity, 2012

   Median savings were higher among beneficiaries with more years of education, but differences in savings by race/ethnicity were evident across all education groups with the greatest disparities among beneficiaries with the most years of education. Among college-educated beneficiaries, median savings for white beneficiaries ($253,550) was nearly five times the median savings for black beneficiaries ($52,250) and more than four times the median savings for Hispanic beneficiaries ($57,000) in 2012.

7. Exhibit 2.7: Median Per Capita Savings of the Medicare Population, by Age and Race/Ethnicity, 2012

   Median savings were lowest among those age 85 and older ($40,900) and those under age 65 ($27,050), but median savings differed across race/ethnicity for all age groups.  Among beneficiaries between the ages of 65 and 74, median savings among white beneficiaries ($118,400) was about six times the median savings among black and Hispanic beneficiaries $19,700 and $17,500, respectively) in 2012. 

8. Exhibit 2.8: Median Per Capita Savings of the Medicare Population, by Marital Status and Race/Ethnicity, 2012

   Median per capita savings were higher among married beneficiaries ($84,550) than among divorced, widowed, or single beneficiaries ($53,750, $41,450, and $19,300, respectively), with racial/ethnic differences in median savings across all marital groups. Among married beneficiaries, median per capita savings among white beneficiaries was $107,350, between five and six times the median savings among black and Hispanic beneficiaries ($18,800 and $19,650, respectively) in 2012.

Section 3: Home Equity

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1. Exhibit 3.1: Share of Medicare Beneficiaries with Home Equity, by Race/Ethnicity, 2012

   In 2012, most Medicare beneficiaries (78%) had some home equity. However, a larger share of white beneficiaries (83%) had some home equity than black or Hispanic beneficiaries (61% and 60%, respectively).

2. Exhibit 3.2: Median Per Capita Home Equity of Medicare Homeowners, Overall and by Race/Ethnicity, 2012

   Among beneficiaries with home equity, half had home equity values below $93,850, with large variations in home equity values by race/ethnicity in 2012. Among those with home equity, median home equity value among white beneficiaries was $100,200 in 2012, compared to $53,650 and $67,700 among black and Hispanic beneficiaries, respectively in 2012.

3. Exhibit 3.3: Distribution of Per Capita Home Equity of Medicare Homeowners, By Race/Ethnicity, 2012

   Among beneficiaries with home equity, the distribution of home equity values differed by race/ethnicity; while the top 10 percent of black beneficiaries had home equity exceeding $181,750, this was more than $100,000 less than the home equity of the top 10 percent of Hispanic beneficiaries ($285,400) and the top 10 percent of white beneficiaries ($325,200) in 2012.

4. Exhibit 3.4: Median Per Capita Home Equity of Medicare Homeowners, by Federal Poverty Level and Race/Ethnicity, 2012

   The share of beneficiaries with home equity and the median amount of home equity increased with income, with racial/ethnic differences in home equity across all income levels.  Among beneficiaries with home equity who had incomes over 400 percent of the federal poverty level, median home equity for black beneficiaries ($65,150) was almost $40,000 less than the median home equity among Hispanic beneficiaries ($103,850) and more than $50,000 less than the median home equity among white beneficiaries ($119,750) in 2012.

5. Exhibit 3.5: Median Per Capita Home Equity of Medicare Homeowners, by Education Level and Race/Ethnicity, 2012

   Median home equity was higher among beneficiaries with more years of education, but median home equity differed across race/ethnicity for all education groups. Among beneficiaries with college degrees who had home equity, median home equity among white beneficiaries ($146,550) was almost $60,000 higher than the median home equity among black beneficiaries ($86,950) and more than $30,000 higher than the median home equity among Hispanic beneficiaries ($115,250) in 2012.

6. Exhibit 3.6: Median Per Capita Home Equity of Medicare Homeowners, by Age and Race/Ethnicity, 2012

   Median home equity values were lowest among those under the age of 65 ($50,300), but home equity values differed across race/ethnicity for all age groups. Among beneficiaries between the ages of 65 and 74 who had home equity, median home equity among white beneficiaries ($109,350) was more than $45,000 higher than the median home equity among black beneficiaries and Hispanic beneficiaries ($58,700 and $63,950, respectively) in 2012.

7. Exhibit 3.7: Median Per Capita Home Equity of Medicare Homeowners, by Marital Status and Race/Ethnicity, 2012

   Among beneficiaries with home equity, median home equity was highest among married beneficiaries, but on a per capita basis,  median per capita home equity values were higher among divorced beneficiaries ($130,800) than among married, widowed, or single beneficiaries ($81,400, $94,200, and $92,150, respectively) in 2012; moreover, more than 40 percent of widowed beneficiaries and more than 60 percent of single beneficiaries had no home equity, and racial/ethnic differences in home equity values were evident across all marital groups. Among divorced beneficiaries, median per capita home equity among black beneficiaries ($86,750) was more than $33,000 lower than the median per capita home equity among Hispanic beneficiaries ($120,050) and almost $50,000 lower than the median per capita home equity of white beneficiaries ($135,700) in 2012.

Section 4: Projected Growth in Income, Assets, and Home Equity

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1. Exhibit 4.1: Projected Growth in Median Per Capita Income Among Medicare Beneficiaries, by Race/Ethnicity, 2012 and 2030

   In 2030, the Medicare population is projected to have somewhat higher incomes than current beneficiaries; median per capita income is projected to rise from $22,500 in 2012 to $28,600 in 2030, with income increasing unevenly across race/ethnicity. In 2030, median income is projected to be substantially higher for white beneficiaries ($32,800) than for black and Hispanic beneficiaries ($19,000 and $18,100, respectively). 

2. Exhibit 4.2: Projected Growth in Median Per Capita Savings Among Medicare Beneficiaries, by Race/Ethnicity, 2012 and 2030

   By 2030, the racial/ethnic differences in shares of beneficiaries with savings are projected to narrow, with the share of black and Hispanic beneficiaries with savings projected to grow to 89 percent and 88 percent, respectively, but remaining slightly lower than the rate among white beneficiaries (97%). The differences in the amount of savings across race/ethnicity is projected to widen by 2030; median savings for white beneficiaries is projected to increase by about $61,100 – more than double the absolute dollar increase in median savings for black beneficiaries and Hispanic beneficiaries ($22,600 and $23,650, respectively) between 2012 and 2030.

3. Exhibit 4.3: Projected Growth in Median Per Capita Home Equity Among Medicare Homeowners, by Race/Ethnicity, 2012 and 2030

   Overall, the share of Medicare beneficiaries who have any home equity is projected to increase slightly from 78 percent in 2012 to 80 percent in 2030, with higher rates among whites (85%) than among black (67%) or Hispanic (65%) beneficiaries that year. Among beneficiaries with home equity, the growth in median home equity values is projected to be more than three times higher for white beneficiaries ($18,850) than black and Hispanic beneficiaries ($5,200 and $5,950, respectively) between 2012 and 2030, leading to widening racial/ethnic disparities in home equity values among the next generation of Medicare beneficiaries.

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