The Myth of the Wealthy Elderly

By Dean Baker

The austerity gang seeking cuts to Social Security and Medicare has been vigorously promoting the myth that the elderly are an especially affluent and privileged group. Their argument is that because of their relative affluence, cuts to the programs upon which they depend is a simple matter of fairness. There were two reports released last week that call this view into question.

The first was a report from the Census Bureau that used a new experimental poverty index. This index differed from the official measure in several ways; most importantly it includes the value of government non-cash benefits, like food stamps. It also adjusts for differences in costs by area and takes account of differences in health spending by age.

While this new measures showed a slightly higher overall poverty rate the most striking difference between the new measure and the official measure was the rise in the poverty rate among the elderly. Using the official measure, the poverty rate for the elderly is somewhat lower than for the adult population as a whole, 9 percent for the elderly compared with 14 percent for the non-elderly adult population. However with the new measure, the poverty rate for the elderly jumps to 14 percent, compared with 13 percent for non-elderly adults.

By this higher measure, we have not been nearly as successful in reducing poverty among the elderly as we had believed. While Social Security has done much to ensure retirees an income above the poverty line, the rising cost of health care expenses not covered by Medicare has been an important force operating in the opposite direction.

http://www.huffingtonpost.com/dean-baker/the-myth-of-the-wealthy-e_b_1094345.html

I don't necessarily agree with his prescriptions, but his diagnoses are usually accurate.

But my parents who are now at retirement age have about nothing.

The difference between the days of the middle class vs the next gen are striking. I suspect if I ever make it to 65 I'll have even less, if that's possible.

You will need it even more than we do.

But Carlin was right- the current system is between owners and slaves, and the illusion that the slaves are free.

"You have no choice. You have owners. They OWN you."

They often had both. We generally have neither.

http://www.bls.gov/news.release/empsit.t06.htm
Scroll down to the bottom right of that table.

The poverty stats would be much worse if it weren't for older people working, and most of them do it to make ends meet.

This means the commissions idea to raise the minimum benefit while curbing benefits for high income earners makes sense.

The average has to be pretty high when you include all the 65+ who own their homes on both coasts, plus their retirement accounts. Those funds are nice at 65 if you're in decent health you retire to a golf course community and have a pretty decent retirement. As long as you don't live too long ... my inlaws are finding that out. In the first 20 years of retirement it was activities and cruises. Now that they are in their 80s with health issues, they have gone through 1/2 their money, and I wouldn't be surprised if they go through the other 1/2 in medical expenses as they live out their lives. And they are lucky - they lived very humbly, bought all the life ins. and long term care insurance, and saved like mad.

This is why we need single payer health insurance. It is hurting everyone - from birth to death - to have to deal with a for-profit health system. If I could pick just one area to nationalize, this would be the one.

it doesn't take a whole lot of multi-millionaires to skew that number, and I'd bet nearly all of them fall into the 65+ range.

Another thing skewing the numbers is poor people have shorter life spans. So by the time you hit the 65+ range the people too poor to afford doctors have died off at a much higher rate.

There's also the difference between wealth and income. Most of the people I know from my parents generation have a lot of wealth in the form of land and houses that were paid for decades ago, but low enough income that they're worried about being able to keep it. They're trying to hold on to it so they have *something* to leave their kids, but most probably won't manage it. Just because you have 150k in assets on the books doesn't mean you can lay hands on the money. Especially now that you can barely expect a pittance for land or houses.

--$28,500/year in SocSec, curtailing their benefits is utterly meaningless in the larger picture.

I am collecting Social Security and my yearly benefits only amount to $16,800. My yearly salary when I was working was just about $28,000. Who are these people who are collecting over $28,000 in Social Security benefits?

http://www.uspublicpolicy.com/fitficaincometaxes.html


You want my spreadsheet where I sort out their data by percent? PM me.

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No rent or mortgage payments , children not needing clothing and feeding anymore etc etc makes a huge difference.

Back before the real estate market crashed, they sold those paid-off homes for huge sums of money--MANY times more than what they payed for them. Then, they moved down here to places like South Carolina, where the real estate is cheap, the taxes are low, and the cost of living is a fraction of what is was where they came from. My town is full retirees that moved here because it's cheap.

If you want to know the true beneficiaries look no further.

Plenty of younger people benefited from the bubble, too. It spawned a whole industry of "house flipping", as featured on the cable show "Flip That House". I know people who did that. I don't know how it all ended, as we all got laid off near the end of the bubble, and I lost touch with them. They were not elderly. Just greedy. I'm not saying that the elderly who made out well from the bubble are greedy. But, they were damn lucky.

And, yes, I DO recognize that a lot of seniors are dirt poor...

come on you're smarter than that...why is everything a zero sum game to you? Why do we need to take away from the elderly? We can't we raise children up to their level?

My grandparents retired "wealthy". Meaning, they had enough money to live off of and didn't depend on government aid. However, my parents, who had better jobs and benefits, will retire very soon with little.

The difference between my grandparents and parents. My grandfather bought a home when he got back from WWII, lived in it for 40 years and paid off the mortgage, and then sold it when he retired to buy a condo in Florida.

My parents bought 4 homes while I was in school. Three of them were in the same city just because they felt they could afford a nicer home. My parents always had a new car every 3 years.

The baby-boomers relied on credit for everything. Part of this was the assumption that their wages would always increase, but some of it was living beyond their means. Everyone wanted to keep up with the Joneses. I lived in an upper middle class suburb, and the teachers parking lot at school was full of high end luxury cars (Lexus, Mercedes, Jaguar, etc). Unless all of these teachers had a wealthy spouse or family money, they were buying into the idea that nice things equaled happiness.

Hopefully people in my generation (20 somethings and younger) realize that buying things on credit is a terrible idea unless you have to. The idea of a Best Buy credit card or Sears credit card baffles me. I have a credit card, and use it once a month for gas to keep it open....that's it. It's there for emergencies. I just wish more people would stop relying on credit for everything.

I am betting that your parents got forced into 401(k)s, and lost a fat chunk of their retirement savings when the stock market crashed. That's the main reason most Baby Boomers have no retirement money.

only if you never pay interest. I get free clothes from LL Bean because I used their card for lots of things and I pay in full every month's balance. I get free gas points using my Chase card for gas and auto repairs/maintenance.

euphemistically ludicrous "shared sacrifice" will have on that 14% and probably 25% or so more of the old and frail who, in reality, are going to share the bulk of the sacrifice by all indications as the uber-wealthy and large corporations continue to luxuriate while sucking at the public welfare teat. :patriot:

I guess they get what they voted for.

Didn't republicans ask for less in cuts than democrats offered in that farce of a "supercommittee"?

we know what their real agenda is.

The motive is clear as can be, isn't it?