What is the 2021 US Poverty Line? (United States Poverty Guidelines)

What is the US Poverty Line?

I keep a close watch on all of my expenses and take a bit of pride in how low I’ve been able to drive them. Our (wife and I) average expenses over the last few months has been around $1,770 ($21,240 per year).

If I deduct my effective property taxes from my expenses and subtract the cash back credit card rewards I am getting (often 5%), the average drops to $1,630 per month, or $19,560 per year. This is consistent with my annual average over the last few years.

Getting down to this level made me curious as to whether my expenses were actually below the U.S. Federal Poverty Level guidelines.

US poverty guidelines

Why? Well, I have no intention of applying for any of the federal benefits one is eligible for when their income is below (or even at exceeding multiples of) the poverty line, such as the National School Lunch Program, Food Stamps, Home Energy Assistance Program, etc.

Rather, I wanted to see how close I was from a cost of living expense standpoint to the poverty income guidelines. What does the U.S. government view as “poverty” or “poor” (or, at least poor enough to be eligible for federal assistance). Am I living below that income level (assuming zero taxes)? Could I live below that level?

So, what is the poverty line? Let’s start there…

The 2021 U.S. Poverty Guidelines

The numbers adjust every year. Here are the 2021 federal poverty guidelines for eligibility for related government programs:

Family Size:48 Contiguous States & D.C.:Alaska:Hawaii:
each additional person, add:$4,540$5,680$5,220

As you can see, the level changes with the number of household members.

According to the Census, 10.5% of the U.S. lives in poverty (note: this is prior to COVID data, and this number has increased dramatically).

Each year, the poverty guidelines are increased/decreased due to changes in the CPI. In most cases, the numbers go up.

Are Our Expenses Below the Income Poverty Line?

At $19,560 in annual expenses, compared to 17,420, we’re not quite there, but we’re close. Could we get there? Yes.

We’d have to cut about $2.1K annually, just under $175 monthly, out of our expenses.

As it is, I feel like our quality of life is pretty rich, even at these expense levels. We cook up great organic vegetarian meals, enjoy an occasional bottle of wine or homebrew, have a nice home in a desirable community, 2 pets, mobile devices, high-speed internet, fancy bikes, clothing, TV, computers, car, backpacking gear, and even take nice cheap vacations. In our view, we are not living deprived. And we certainly don’t feel impoverished in any way.

The sacrifices it would take to cut $194 per month out of our expenses would not be too painful. It would probably come from a mix of cutting some entertainment, changing our diet slightly to accommodate a shift to more bulk food purchases, reducing our HVAC energy consumption, re-evaluating our insurance levels, and appealing my property taxes with city hall. These are all things that are on my to-do list.

This thought experiment is not to compare to or diminish the pain that can be felt while living in poverty. There is effectively a poor tax that is very real. Also, it’s not even a fair comparison. I live in a lower cost of living state. I’ve spent well over a decade optimizing my finances. And I have savings to pad any emergency or big ticket items.

However, there are plenty of opportunities to drive expenses lower without sacrificing quality of life. That’s my point here. When doing that, it’s possible to become more immune to economic factors that are out of your control, which can sometimes impact your income levels. And you might even have a little fun in the process.

Could you Live Below Poverty Level?

Regardless of your income levels,

  • Are your annual expenses below the poverty line? If so, do you feel poor or deprived?
  • If your expenses are above the poverty line, could you get there with effort? How would you do it?

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