America is Hurting Financially, But Seniors Aren't

Senior supports are working, but younger generations are paying a high price.

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In yet another study of how bad things have been going for Americans who don't happen to be wealthy, the Pew Research Center last week issued a disheartening report about the "lost decade" that the middle class has experienced. The recession, and particularly the collapse of home values, has continued to pummel what used to be the core strength of the nation.

A retired couple stands next to their comfort bikes
A retired couple stands next to their comfort bikes

The middle class is both poorer and smaller than it used to be. And Pew's assessment is just one of many bleak conclusions reached by experts who have been sifting through this dismal data. People who lost jobs during the recession have struggled to find new ones, often accepting enormous salary cuts when they've been fortunate enough to become re-employed.

[See 12 Ways to Increase Your Social Security Payouts.]

Middle-class incomes are down sharply. A report from Sentier Research says median household income has fallen nearly 5 percent during the "recovery" of the past three years. It's also off more than 7 percent since the recession began and, perhaps more ominously, off 8 percent from 12 years ago—from $55,470 in January 2000 to $50,954 in June 2012, adjusted for inflation. Too bad we couldn't have stayed in the old millennium.

Within these worrisome overall trends, however, the economic fortunes of older Americans stand in contrast. If you are over age 65 and, at least financially, if you have been widowed, the Pew study of U.S. Census data concluded, you are likely to have come out ahead, both in the past decade and over the past 40 years.

From 1971 to 2011, the percentage of middle-income Americans who are 65 and older rose from 9 to 16 percent; among those ages 45 to 64, it rose from 31 to 34 percent. Meanwhile, the percentage of middle-class younger people declined, from 30 percent to 22 percent of the total for those ages 18 to 29, and from 29 percent to 28 percent for people between the ages of 30 and 34. Part of this is due to the relative growth of the older segments of the population. But only part.

[See Older Women Face Serious Money Inequality.]

Over this same period, the percentage of low-income U.S. households represented by older people fell from 31 percent to 23 percent (this was the only age group showing improvement during this 40-year period.) And in upper-income households, people age 65 and older fared the best of any age group. Only 7 percent of older householders were in the upper-income group in 1971, but this group comprised 11 percent of upper-income households in 2011. The only group of adults with falling representation in upper-income households over this period were young adults ages 18 to 29. They comprised 25 percent of upper-income households in 1971, but only 17 percent in 2011.

And in Sentier's assessment of income data, it concluded, "almost every group is worse off now than it was three years ago, with the exception of households with householders 65 years old and over."

Seniors as a group surely are not living it up while other parts of society suffer. We know that millions of older Americans live near the financial edge, depending almost totally on modest monthly Social Security payments. But millions of other Americans are living on the edge as well, and not faring as well as their elders.

We know that older Americans have guaranteed Medicare health insurance, but also that many cannot afford their medications and skip needed care because they can't afford it. Still, is there any doubt that most younger Americans would love to be covered by Medicare? It's a superior program in most ways to increasingly expensive private insurance. And if health reform does succeed, the result will be—let's admit it—a system for everyone that looks a lot like what older Americans already get with Medicare.

[See Seniors Don't Pay Full Medicare, Social Security Share.]

Yes, people receiving Social Security and Medicare often have paid payroll taxes into both programs for decades. But study after study shows that program benefits—especially Medicare—are much greater than payments into these programs. Older Americans are simply doing much, much better than younger generations in relative terms.

Republicans and Democrats may be busy lobbing ideological grenades at each other, and Medicare has taken center stage in the rhetorical warfare over the health reform law. But neither party has come to grips with the disastrous trend lines of society's imbalance in how it is supporting young and old generations. Everyone pays lip service to improving education, for example, but funding for teachers (and cops and firefighters) continues to fall while the senior healthcare tab continues to grow.

Higher taxes on the rich and closing tax loopholes for the wealthy may be a comforting thought for those who think we can expand spending supports for both the young and old. It would help, but not that much. And a closer look at tax loopholes reveals that the biggest drains on the Treasury come from consumer-friendly items like deductions for mortgage interest, employer health insurance premiums, and contributions to retirement accounts.

Someone has to get less. A look at the facts says that should include some older Americans.