A Social Security Administration study has found that the average income of the nation's aged, after years of lagging far behind the rest of the population, rose rapidly over the past generation. By 1984, it had reached about four-fifths of the level for people under 65 after adjustment for differences in family size.
The study said income of the aged rose in proportion to that of the non-aged because of increases in Social Security from 1967 to 1984, plus higher interest rates, which enabled the elderly to realize more income on investments. At the same time, the study said, "The poor performance of real wages was an important factor in inhibiting the growth of the non-aged . . . . "
The study, written by the SSA's Daniel B. Radner and published in the Social Security Bulletin, confirms the impression formed by earlier Census Bureau reports that older people, once the poorest group in society, are beginning to draw equal with the rest of the population, though they are still behind, particularly in comparison with middle-aged people.
The study found that in 1984, the average income for all 93 million family units of all ages (meaning families of two or more people and unrelated individuals living alone) was $25,724 (measured in 1982 dollars). However, for the 18.5 million family units of the aged, the average was $17,895.
On a raw income basis, that means the aged family units had average income about two-thirds that of the national average for all ages, but that ignores differences in family size. Aged family units generally have fewer people than younger ones.
The author adjusted the figures for family size and also for the fact that larger families need less money per person because of economies of scale; "for example, many expenses, such as rent, do not increase proportionally as family size increases." These adjustments are critical in determining the real economic well-being of the aged compared with others in society. Without them, the actual purchasing power of a family is distorted.
Based on the adjustments, the author found that in 1984, the real average income of people in the aged family units was about 84 percent that of the under-65 population, compared with 69 percent in 1967.
Many scholars prefer to use median income figures (in which half have higher income than the median, half have lower), which correct for extremes at both the top and bottom of the income scale. The study found that real median income of the aged family units was 73 percent that of the under-65 population, compared with 53 percent in 1967.
The study noted that while the aged had improved their income status compared with the rest of the population, a higher proportion of the aged still were in the lower income categories. For example, in 1984, three-fifths of the aged family units had income (before adjustments for family size) below $15,000, but less than two-fifths of the population had incomes below $15,000.
The author also found that while the aged generally had average incomes per family unit that was higher after adjustment for family size than income for people under 35, the income of the aged was lower than that for families in the age 35-64 range.