How much do senior citizens rely on Social Security? Even more than you might think. A new study finds that more than 46 percent of Americans die with less than $10,000 in financial assets, with many spending the end of their life strongly dependent on the government.


"Many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support," says the study, co-authored by MIT's James Poterba, Dartmouth's Steven Venti, and Harvard's David Wise.

But we don't always get the full financial picture. By other measures, however,  "many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s," the researchers conclude.

Why should low financial asset levels be a problem, then, if these seniors' income seems to remain steady? After all, you can't take it with you. With almost no financial assets, these seniors "have little capacity to pay for unanticipated needs such as health expenses or other financial shocks or to pay for entertainment, travel, or other activities."

In fact, the study suggests that there may be a notable connection between health and wealth, as less healthy seniors have significantly lower assets than healthier ones: "For example, the mean health percentile of persons with annuity income less than $10,000 and no financial assets is 24.1. For those with annuity income between $30,000 and $40.000 and financial assets between $25,000 and $50,000 the median health percentile is 43.3."

That's part of the reason there's renewed interest in passing policies to help lower-income Americans build up their assets over the course of their life, as mortgage tax breaks and other assistance for asset-building predominantly benefit middle- and upper-income Americans. The study is also a reminder of the major impact that changes to Social Security would have for many ordinary Americans. "If we were to substantially reduce Social Security benefits for those later in life, that there is a share of the elderly households for whom that would translate very directly into reduced income, because they seem to have accumulated little in the way of financial resources," notes Poterba.

(h/t Mark Thoma)