November 8th, 2011
Econintersect: The differences in wealth between the young and older Americans is the greatest on record, according to a study to be published by the Pew Research Center. The report will show that median net worth of households headed by someone 65 or older was $170,494 in 2009. That is 42% greater than in 1984. The median net worth for the younger-age households was $3,662 in 2009, down by 68 % since 1984. The Pew used 1984 as the reference year because that is the first year when such data was broken down by age group by the U.S. Census Bureau. Follow up:
Follow up:The numbers have much more impact when viewed in a graph from the Pew Research Center. From the AP:
The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday.
While people typically accumulate assets as they age, this gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.
The Pew report will identify the bursting housing bubble, mortgage debt problems, increasing minority populations, greater numbers of single parent households and college loans as significant factors weighing more on the young than the elderly.
Aiding the situation for older Americans is that they are working longer. In 1985 only 10% of those 65 and older were working, but this was up to 16% in 2010. Also, the percentage of senior income coming from Social Security has remained constant. It comprised 55% of income for households headed by someone 65 or older in 1984 and is the same today.
The following table from Pew shows the net worth changes for all age groups:
The Great Recession has had an increasingly severe effect on household net worth as the age of the head of household becomes younger:
The history of age demographics and poverty level population are also covered in the Pew research:
The changes in median real household income between 1967 and 2010 are also shown :
From the AP:
The report, coming out before the Nov. 23 deadline for a special congressional committee to propose $1.2 trillion in budget cuts over 10 years, casts a spotlight on a government safety net that has buoyed older Americans on Social Security and Medicare amid wider cuts to education and other programs. Complaints about wealth inequality, high unemployment and student debt also have been front and center at Occupy Wall Street protests around the country.
"It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them," said Harry Holzer, a labor economist and public policy professor at Georgetown University who called the magnitude of the gap "striking."
An argument was given counter to that of Mr. Holzer:
Nancy LeaMond, an executive vice president of AARP, noted that older Americans spend a disproportionate share of their income on out-of-pocket medical care, compared to other groups. "Millions of older Americans today continue to struggle to make ends meet," she said. "Many older Americans do own their homes, but plummeting housing values - along with dwindling savings, stagnant pensions and prolonged periods of unemployment - have taken their toll."