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Methodology


 

Financial Indicators

Weights*
Indicator
Methodology
Year
100 large
252 small
Number of banks, financial institutions, etc.
Per capita, NAICS codes: 522 and 523
The highest value receives a score of 100
Data source: Census Bureau
2012 0.070 0.065
Total bank deposits
Per capita, divided by corresponding U.S. value
The highest value receives a score of 100
Data source: Federal Deposit Insurance Corp.
2012 0.051 0.070
Tax burden
State and local taxes paid, per capita (state-level data); divided by corresponding U.S. value
The lowest value receives a score of 100
Data source: Tax Foundation
2010 0.186 0.165
Dependency ratio
Population (<18 and 65+) divided by population 18-64
The lowest value receives a score of 100
Data source: Census Bureau
2012 0.057 0.084
Indexed growth of small businesses
Indexed growth of number of businesses (<50 employees), divided by corresponding U.S. value
The highest value receives a score of 100
Data sources: Census Bureau, Moody's Analytics
2006; 2011 0.213 0.173
% of 65+ population below poverty line
The lowest value receives a score of 100
Data source: Census Bureau
2012 0.071 0.088
Capital gains as % of adjusted gross income
Net capital gains divided by adjusted gross income (state-level data)
The highest value receives a score of 100
Data source: Internal Revenue Service
2011 0.120 0.117
Income growth
Indexed income growth (2005-2010), divided by corresponding U.S. value
The highest value receives a score of 100
Data sources: Bureau of Economic Analysis, Moody's Analytics
2007; 2012 0.122 0.133
Amount of reverse mortgages
Initial principal limit/population 65+, divided by corresponding U.S. value. 3-month averages (January-March)
The lowest value receives a score of 100
Data sources: Department of Housing and Urban Development, Milken Institute
2014 0.111 0.105
* Figures may not add up to 1 due to rounding.
** Used only for large metros.
*** New variable.

Financial security is a growing concern for older individuals, especially as living costs may rise. We included the same indicators as the 2012 index because they provide the most comprehensive measurement of financial well-being across all metros. A few indicators now have updated methodologies.

State and local taxes can have substantial impacts on the financial burden of older adults, and these policies can vary widely each year. In order to simplify the method, we did not measure tax burdens in relation to the personal income of each metro. Since state and local taxes can include taxes beyond personal income tax, we made this indicator more comprehensive in scope, and applied the state and local taxes to each metro within the same state. Metros that fell into more than one state were adjusted accordingly.

Older adults with substantial financial stress may seek out reverse mortgages to alleviate some of the burden. The Federal Housing Administration leads the Home Equity Conversion Mortgage (HECM) program, which is the only government-insured reverse mortgage program. The Joint Center for Housing Studies reports that in recent years, a growing number of older Americans have begun using reverse mortgage loans to pay off other debts, a practice that can prove more of a burden for low-income seniors. Because this indicator is monthly data and can vary greatly depending on the month of data, we used a three-month average (January–March, 2014) to smooth the estimates.

Go to Living Arrangement Indicators