Older Americans fared best during the recession, finds a study by Federal Reserve Bank of St. Louis analysts William Emmons and Bryan Noeth.
That’s partially because those born between the 1930s and 1940s built significant wealth prior to the 2008/2009 downturn. Consider that “virtually all of the increase in household wealth between 1989 and 2001 had accrued to older families, which [have been] defined as aged 55 or older,” says the study.
It adds “Most of the wealth accumulation by older [American] families [is due] to the changing nature of the families themselves, including a higher likelihood over time of older families being married, being in good health, and being headed by someone with a college education.”
What’s more, these older citizens were able to best protect their wealth during the downturn, says the study. In contrast, families headed by Baby Boomers and Gen Xers (those born between 1950 and 1970) lost more money and are “on track for lower income and wealth in old age.”
The lesson? Governments need to stop coddling the wealthy, says Washington Post contributor Robert J. Samuelson in an article. He finds the study done by Emmons and Noeth “should…alter the climate for Washington’s stalemated budget debate” since retirement and healthcare programs are often considered untouchable during budget talks.
In fact, he writes, “The study demolishes the widespread notion that older Americans need exceptional protection against spending cuts because they’re poorer and more vulnerable than everyone else.”
In reality, Samuelson points out many seniors are actually “financially comfortable (or rich), in reasonably good health, and more self-reliant than not,” as the study suggests.
He highlights the following data in his article: “From 2007 to 2010, median income for [U.S.] families under 40 dropped 12.4% to $39,644. For [those between the] ages of 40 and 61, the comparable decline was 11.9% to $56,924.” Meanwhile, those aged 62 to 69 gained 12.3% to $50,825, and the incomes of those older than 70 rose 15.6% to $31,512.
Though people’s incomes drop as they age, Samuelson stresses their expenses also drop dramatically. The mortgages and debts of older Americans are often paid off and children are grown. Plus, people enjoy the benefits of programs like Medicare, Social Security and pensions, says the study.
The study and Samuelson both suggest the wealth and interests of younger families must also be prioritized. For more, read the full study.
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