The Old Get Richer And The Young Get Poorer
Pew has a study illustrating the growing disparity in wealth between older Americans and younger Americans.
Older adults have made dramatic gains relative to younger adults in their economic well being during the past quarter century, according to a new Pew Research Center analysis of data from two key U.S. Census sources. …
Trends in household wealth reveal the pattern most vividly. In 2009, the median net worth (all assets minus all debts) of households headed by an adult ages 65 or older was 42% more than that of their same-aged counterparts in 1984. By contrast, the net worth of a typical household headed by an adult under the age of 35 in 2009 was 68% less than that of their same-aged counterparts in 1984.
As a result of these divergent trends, in 2009 the typical household headed by the older adult had $170,494 in net worth, compared with just $3,662 for the typical household headed by the younger adult. People generally accumulate wealth as they age, so it is not unusual to find large age-based gaps on this measure. However, the current gap is unprecedented. In 1984, the age-based wealth gap had been 10:1. By 2009, it had ballooned to 47:1.
There are a lot of perfectly reasonable causes for a disparity in wealth between young Americans and old Americans. Older Americans simply have more time to build up wealth. They have more time to invest and create savings funds, and more time to pay into both. They also tend to earn bigger wages, having more experience than younger citizens.
But that wouldn’t necessarily explain the growth in the disparity. Now, I’m not suggesting that we should be trying to mandate equal outcomes in wealth distribution, but we do have a big problem with redistributing wealth from younger, working Americans to older, retired Americans.
As evidence, we need look no further than the average pay stub where payments into Social Security and Medicare are some of the largest expenses withheld.
What this argues for, at the very least, is means testing for these entitlements. Right now everyone collects Social Security and Medicare whether they’re retiring as billionaires or if they’re impoverished. We’d be much better off if people only qualified for those programs if they were actually in need of them.
It would mean that the programs would cost significantly less, and represent less of a burden on America’s workers,
Tags: medicare, social security
