Senior citizens’ financial woes are exaggerated
By Charles Lane,
Now that Paul Ryan, the author of a major proposal to overhaul Medicare, is going to be on the Republican ticket, the fall presidential campaign shapes up as a battle over the federal government’s obligations to senior citizens.
Before it begins, I hereby declare that I admire and like the elderly. My parents are elderly. I myself hope to be elderly someday, and to remain that way for a long time.
But I do not feel sorry for the elderly as a group, and neither should you.
In particular, you should not let an exaggerated portrayal of their economic vulnerability — the “Mediscare” campaign that Democrats have run in the past and are dusting off again — unduly affect your thinking about entitlement policy.
The fact is that older Americans are doing pretty well financially — by some measures, better than the rest of us.
Only 9 percent of Americans older than 65 had incomes below the poverty line in 2010, according to a Census Bureau report in November. By contrast, 13.7 percent of the general population was living in poverty — including 22 percent of children younger than 18.
The elderly poverty rate is higher under a different statistical definition designed to reflect seniors’ greater out-of-pocket medical costs, but it still remains slightly below that of the general population.
So the elderly are holding their own with respect to income. When it comes to household wealth, too, they are doing fine.
Last year, the Pew Charitable Trusts reported that the median net worth of households headed by an adult 65 or older rose 42 percent in real terms between 1984 and 2009, to $170,494. During the same period, median net worth for households headed by an adult younger than 35 shrank 68 percent, to $3,662.
Seniors built this advantage partly because they had more time to amass equity in their homes. Even the real estate downturn that began in the middle of the last decade has not wiped out the older generation’s wealth advantage. In June, when noting changes in Americans’ net worth between 2005 and 2010, the Census Bureau reported that the median elderly-headed households lost 13 percent of their net worth — easily the smallest decrease of any age group.
In fact, old age is now correlated with strong personal finances. The Federal Reserve Board reports that households headed by someone 75 or older have the highest median net worth — $216,800 — of any population cohort.
This helps explain the findings of a recent USA Today-sponsored poll: that more than three-quarters of Americans older than 60 expect their quality of life to stay the same or improve over the next five to 10 years. Only a minority report any economic anxiety; indeed, 60 percent say it is “easy” to pay their monthly bills.
The contentment that reigns across Older America is a tribute to Social Security, Medicare and the rest of the safety net — federal and state — for the elderly. The near-abolition of old-age destitution ranks among the great achievements of the New Deal and Great Society.
We must never go back to the days when old age was a time of privation for the relative few who reached it. But as nightmare scenarios go, that one seems more remote than entitlement-driven national bankruptcy, given the stubborn and expensive fact that the over-65 population is on track to double in the next 40 years.
Yes, today’s seniors paid into the systems from which they are now getting benefits. But they are getting much more out: The average pre-2010 retiree got more in benefits than he or she paid in taxes. Taxes on current workers made up the difference.
There is no shortage of plausible alternatives or fixes to today’s Medicare program. I’m not necessarily sold on Ryan’s proposal, which would offer future seniors a subsidy to buy private insurance, instead of today’s fee-for-service program. It’s embedded in a budget that also imposes sweeping and unnecessary tax cuts.
But Ryan’s plan is a lot more comprehensive than anything President Obama has proposed. And it’s no mystery why Obama, and most other politicians, avoid specifics: Senior citizens vote at a higher rate than any other population group — 74 percent in the 2008 election. Florida is chock full of them. Politically, you can’t argue with Mediscare.
Sooner or later, politicians are going to have to treat older voters not as potential victims but as secure and fortunate citizens, who can and should contribute their fair share to resolving the country’s fiscal predicament. In other words, to treat them as what they are.
Read more on this issue: Robert J. Samuelson: Paul Ryan could inspire meaningful debate Matt Miller: Understanding the Ryan plan Kathleen Sebelius: The Affordable Care Act has made the U.S. health-care system stronger