You might think so if you read some recent stories in the news about wealth differences among generations. But you may want to think again.
A recent study published by the Pew Research Center on “The Rising Age Gap in Economic Well-Being” states that in 2010 households headed by seniors (adults age 65 and older) had enjoyed a 42 percent increase in net worth compared with same-aged households in 1984. At the same time, households headed by young adults (under 35) had a 68 percent decrease in net wealth over the same period. These are dramatic numbers, right?
Not so fast. Closer reading of the report shows the economic events behind the numbers. Housing is a large part of net worth. Home values have increased dramatically since 1984. Most seniors purchased their homes before the housing bubble and have paid off their mortgages. The report tells us that older Americans have benefitted from good timing. “If it had not been for home equity, the median net worth of older American households in 2009 would have been 33% lower than that of older households in 1984, instead of 42% higher.” On the other hand, those young adults who bought homes during the housing bubble were victims of bad timing.
The report discusses other changes since 1984. More seniors are working today (16 percent in 2010 compared to 10 percent in 1985), while young adults have delayed entering the labor force. Young adults are attending college in increasing numbers and, as a result, more young adults have debt from college loans. Young adults also are delaying marriage and more young adults are single parents – two factors linked to lower household wealth.
You get the idea. It pays to read beyond the headlines.
Significantly, the day after the Pew Report made headlines, the Census Bureau issued a new comprehensive poverty measure that shows that poverty among the elderly is much higher than previously estimated – 16 percent for persons over 65 rather than the 9 percent
originally reported. That is consistent with Census data showing that, in 2010, half of all retirees 65 and over who were no longer in the workforce had a yearly income of less than $16,140. To put this in perspective, that’s only $1,060 more than the earnings of our lowest paid workers, who earn the federal minimum wage of $15,080 a year.
Older Americans are a diverse group. While many may have benefited from rising home values, work opportunities, and pensions, too many others have few assets, no job, no pension, and are struggling to survive on very limited income. Simply put: Seniors are not the ‘greedy geezers’ that some would like us to believe.