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Archive for Monday, November 7, 2011

U.S. wealth gap between young, old widest ever

November 7, 2011

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— The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt.

The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released today.

While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.

The analysis reflects the impact of the economic downturn, which has hit young adults particularly hard. More are pursuing college or advanced degrees, taking on debt as they wait for the job market to recover. Others are struggling to pay mortgage costs on homes now worth less than when they were bought in the housing boom.

The report, coming out before the Nov. 23 deadline for a special congressional committee to propose $1.2 trillion in budget cuts over 10 years, casts a spotlight on a government safety net that has buoyed older Americans on Social Security and Medicare amid wider cuts to education and other programs, including cash assistance for poor families.

“It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them,” said Harry Holzer, a labor economist and public policy professor at Georgetown University who called the magnitude of the wealth gap “striking.”

The median net worth of households headed by someone 65 or older was $170,494. That is 42 percent more than in 1984, when the Census Bureau first began measuring wealth broken down by age. The median net worth for the younger-age households was $3,662, down by 68 percent from a quarter-century ago, according to the analysis by the Pew Research Center.

Net worth includes the value of a person’s home, possessions and savings accumulated over the years, including stocks, bank accounts, real estate, cars, boats or other property, minus any debt such as mortgages, college loans and credit card bills. Older Americans tend to hold more net worth because they are more likely to have paid off their mortgages and built up more savings from salary, stocks and other investments over time. The median is the midpoint, and thus refers to a typical household.

The 47-to-1 wealth gap between old and young is believed by demographers to be the highest ever, even predating government records.

In all, 37 percent of younger-age households have a net worth of zero or less, nearly double the share in 1984. But among households headed by a person 65 or older, the percentage in that category has been largely unchanged at 8 percent.

Comments

just_another_bozo_on_this_bus 2 years, 11 months ago

What's lacking in this analysis is the level concentration of wealth in the hands of a small percentage of elderly that significantly skews this data.

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yourworstnightmare 2 years, 11 months ago

A mean would be skewed, but a median shouldn't be skewed that much by a few folks at the opposite ends.

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George Lippencott 2 years, 11 months ago

Unless they had a very high next worth - like hundreds of millions?

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yourworstnightmare 2 years, 11 months ago

These data should come as no surprise, given that the current retiree generation were the full-on beneficiaries of mid to late 20th century liberalism and Great Society measures.

Current retirees have/had pensions, unions, retirement benefits, early retirement, medicare, social security, GI Bill, prescription drug plan, cheap, publically-subsidized education, etc.

The goals of liberalism to ensure a stable and prosperous retirement were fulfilled with this generation. The problem is, many of them want to shut the door behind them and deny these benefits to future generations.

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voevoda 2 years, 11 months ago

There's a difference between total wealth and disposable income. Retirees may have greater total wealth, because they own their homes free and clear, and possess most necessary household furnishings and personal effects. But they don't necessarily have more disposable income. That depends upon how much they receive in pensions (Social Security and private) and what sort of income their IRAs and annuities yield. The latter has fluctuated a lot, leaving the seniors who bought into the "investment" route starved for ready cash and dependent upon Social Security to survive. In theory, if seniors have property, their heirs in the working generation will eventually inherit it. In reality, though, a lot of seniors don't leave behind much. Even with Medicare, some seniors encounter catastrophic health care costs. That often sucks away all their wealth into the hands of private providers of health care, leaving the heirs with nothing but bills.

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Richard Heckler 2 years, 11 months ago

Even Florida Believes The GOP Is Intentionally Sabotaging The Economy To Defeat Obama

Greg Sargent at the Washington Post picks up on a new poll out of Florida that does not bode well for the GOP.

The poll was conducted by Suffolk University and among other things asked voters "Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?"

The results: 49% said yes, 39% said no.

Yikes? Maybe.

Those results certainly dovetail nicely with Obama's reelection plan to run against a do-nothing Congress — particularly as Florida will be a key battleground in 2012 — and moreover reflect the record low approval rating Congress has been getting of late.

http://articles.businessinsider.com/2011-11-03/politics/30354068_1_new-poll-record-low-approval-rating-barack-obama

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Flap Doodle 2 years, 11 months ago

How many threads did you spam with this same post, merrill?

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George Lippencott 2 years, 11 months ago

And this is a surprise? Wealth accumulation has always correlated with time and experience. Our current financial difficulties makes it hard for the young to even break into the process. It does not help that the very rich (top 5%) who hold an ever increasing share of our national wealth tend to be older. It is not “granny” that stole your birthright. It is the elites in all fields that have enriched themselves at the expense of the rest of us.

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George Lippencott 2 years, 11 months ago

yourworstnightmare (anonymous) says… These data should come as no surprise, given that the current retiree generation were the full-on beneficiaries of mid to late 20th century liberalism and Great Society measures. Current retirees have/had pensions, unions, retirement benefits, early retirement, Medicare, social security, GI Bill, prescription drug plan, cheap, publically-subsidized education, etc. Moderate Responds: Future retirees have IRAs, 401Ks, pensions, unions, retirement benefits, early retirement, social security, Medicare, Medicaid, GI bill, prescription drug plans, publically subsidized education, etc. SS has been here since the thirties. Unions since the teens. GI bill since WWII, publically subsidized education since the eighteen hundreds. Today’s youth have low cost government loans for college and a forgiveness policy that essentially turns them into grants. They have Obama Care. I note that the prescription drug plan, Medicare, Medicaid and SS are means tested. I also note that about half our senior population lives on Social Security for which they paid. That runs on average in the mid teens so they are not “wealthy” The singular problem is that there are the 5% (think 1%) who are filthy rich and really bend that curve. Once again generalizations hide the detail. Looks to me like the press is once again trying to get us all riled.

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