The Elderly Aren't The Poorest, Any More
June 12, 2000
Social Security and Medicare alone now account for 34 percent of all federal spending, more than twice what is spent on national defense. The elderly also gain from many other programs, including veterans benefits, government employee pensions and various housing, welfare and health programs as well.
The premise of many of these programs was that the elderly largely were poor. And at one time this was a valid assumption.
- In 1959, the poverty rate among those over age 65 was 35.2 percent versus 22.4 percent for the population as a whole.
- By 1998, the poverty rate among the elderly had fallen very sharply to just 10.5 percent and was well below the 12.7 percent rate for the nation.
A key reason for the improved economic condition of the elderly is that their Social Security benefits are fully indexed to inflation -- overindexed, according to Sen. Pat Moynihan (D-N. Y.), owing to the Consumer Price Index's overstatement of inflation. Since 1970, the average Social Security benefit has risen 6.6 times, while the average wage has risen only 3.7 times.
Also, the elderly have gained disproportionately from the rise in the stock market. The elderly and near-elderly owned more stock at the beginning of the stock market boom than younger workers struggling to pay off college loans and going further into debt for cars, homes and children.
- According to the Federal Reserve, between 1989 and 1998, families headed by those aged 65 to 74 saw the biggest rise in net worth of any age group.
- Median net worth rose from $97,100 to $146,500 (in 1998 dollars) for this group.
- Almost all those younger actually saw their net worth fall.
Historically, rising incomes and wealth have tended to make people more sympathetic to the Republican Party's message of low taxes, fiscal prudence, a strong national defense and free markets. And the elderly are no exception. As their economic situation has improved, their politics have moved rightward.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, June 12, 2000.
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