Age Gap Rises in Economic Well-Being
The rich aren’t just getting richer, but wealthy older Americans are noticeably better-off than their counterparts from three decades ago in several areas like income, employment, home ownership and housing values.
It may be no surprise that older Americans are wealthier than younger ones. But a new study from Pew Research Center analyzed the economic well-being of current older and younger adults to those in the past and found that the age-based wealth gap skyrocketed 47:1 in 2009 compared to 10:1 in 1984.
In 2009, the median net worth of households headed by adults aged 65 and older was 42 percent more than the same age group in 1984. In contrast, the net worth of households headed by an adult under 35 in 2009 was 68 percent less than the same age group in 1984.
“These age-based gaps widened significantly during the sour economy of recent years, but all key trends are several decades old, indicating that they are also linked to long-term demographic, social and economic changes that have affected different age groups in different ways,” Pew said in a statement.
These changes include structural changes in the labor and housing markets, delayed marriage and retirement, and the changing racial and ethnic composition of the population.
Pew used two sources from the Census: data for 1984 to 2009 from the Survey on Income and Program Participation and data for 1967 to 2010 from the Annual Social and Economic Supplements to the Census Bureau’s Current Population Survey.
Interesting facts from the report:
Wealth: Households led by an adult ages 65 or older had median net worth of $170,494 in 2009, compared to $120,457 in 1984, adjusted to 2010 dollars, for a gain of 42 percent. Households headed by an adult under the age of 35 had median net worth of $3,662 in 2009, compared with $11,521 in 1984: a decline of 68 percent.
Poverty: The relationship between age and poverty has flipped in the past four decades. In 1967, 33 percent of households led by an older adult were poor, compared to 12 percent of households led by a younger adult. But in 2010, 22 percent of younger households were poor, compared with 11 percent of older households.
Housing value: In 2009, the typical homeowner head of household ages 65 or older had $145,361 in housing wealth. In 1984, the similar age group had only $92,326 in housing wealth, showing a growth of 57 percent. In contrast, the typical homeowner younger than age 35 had $24,396 in housing wealth in 2009, compared to $35,150 for the same-aged group in 1984, a decline of 31 percent.
Pew points out that these opposing trends are largely a function of market timing because most older homeowners purchased their homes long ago at “pre-bubble” prices.
But many young homeowners purchased their homes at “bubble” prices, and now have less equity in their homes.