Elderly Americans have achieved basic economic parity with the rest of the population and no longer are a disadvantaged group, according to the President's Council of Economic Advisers.
The CEA said in its annual report to the president that the improved financial status of the elderly largely is the result of major increases in Social Security benefits. The analysis was presented to Congress yesterday as part of the president's annual economic report.
The poverty rate for those over 65 was lower than that for the rest of the population in 1983, and elderly people with spouses on average were more financially secure than the nonelderly, the report said.
In 1983, the poverty rate for the entire elderly population was 14.1 percent, compared with 15.4 percent for younger Americans, including those under 24, the report said.
"Thirty years ago, the elderly were a relatively disadvantaged group in the population," the report said. "That is no longer the case. The median real income of the elderly has more than doubled since 1950, and the income of the elderly has increased faster over the past two decades than the income of the nonelderly population. Today, elderly and nonelderly families have about equal levels of income per capita."
The CEA report does not recommend any changes in the Social Security system, but it comes at a time when some members of Congress have suggested reducing benefits to help lower the federal budget deficit.
The average before-tax income of elderly families, adjusted for inflation and excluding benefits such as Medicare and food stamps, increased from $18,260 in 1970 to $21,420 in 1983. For families between the ages of 25 and 64, such income declined from $31,050 to $30,940, the CEA study said.
Per capita family income for the elderly was $9,080 in 1983, compared with $8,960 for younger families. Part of the difference was that households headed by the elderly are slightly smaller than those headed by younger Americans.
However, the study also cautioned that, although the elderly as a group are less likely to have incomes below the poverty line, they are more likely than younger people to have members with incomes below the average of their age group.
Many elderly people live alone and they -- especially women -- "often have very limited financial resources; they are often poor." The study also said that poverty rates for elderly blacks and the very old tend to be high. Last year, the poverty line for single individuals was about $5,300, according to the Census Bureau.
In 1983, the average income of "unrelated elderly individuals" was $10,040, compared with $16,900 for single persons under 65. The average income for elderly women living alone was 80 percent of the average for elderly men living alone.
The results of the study parallel recent reports of private research groups such as The Urban Institute, which last fall reported that, contrary to past stereotypes, the elderly seem to be faring better financially than the rest of the population.
"It's a fact that the elderly are a lot better off than they used to be," Isabel V. Sawhill, one of the authors of The Urban Institute report, said in an interview yesterday. "The Social Security program has been very effective." But she said that "there's a lot of variability among the elderly group."
In addition, the elderly have lower average tax rates than the rest of the population and special tax breaks and thus have more money to spend, the CEA said.
"Income levels of the elderly have improved . . . largely because of increases in Social Security benefit levels and coverage," the CEA report said. "Income levels of the elderly have improved relative to the nonelderly since 1970 because Social Security benefits increased by 46 percent in real terms while earnings from wages and salaries -- the major source of income for the nonelderly -- decreased by 7 percent" after adjustment for inflation.
"Thus, younger families have had to work more to keep up with inflation since 1970," the report said. "Older families have not."
Some critics of studies such as the CEA's contend that the elderly are not better off than younger people because the elderly must pay a larger proportion of their income on medical care and food than younger people do.
However, the CEA study said that goods typically purchased by the elderly and the nonelderly have had similar price increases and that Social Security benefits have increased faster than inflation.
Income data used in the report did not include in-kind benefits. Almost all elderly families receive Medicare. Federal expenditures on Medicare for the elderly averaged about $1,800 per elderly person in 1983, the study said.
Additionally, $12 billion in Medicaid -- about one-third of all Medicaid funds -- was devoted to the aged, and about 16 percent of those over 65 are eligible for medical care from the Veterans Administration.
Although elderly households make up 21 percent of all households, they account for 31.5 percent of households receiving housing subsidies and 29.4 percent of those getting Medicaid. However, they make up 16.8 percent of households receiving food stamps, the CEA study said.
After including food, housing and medical benefits, the poverty rate for the elderly declined to about 3.3 percent, the CEA report said. The rate for the rest of the population, which receives fewer medical benefits, would drop to about 11.1 percent using the same analysis.
About 15 percent of the income of the elderly comes from earnings, about 25 percent from assets, about 40 percent from Social Security benefits and about 15 percent from private pensions, the CEA report said. Miscellaneous sources provided the remaining 5 percent.