Income of the Elderly

[cthulu2016]

Income of the Elderly

In response to this post, some readers asked for data on the income of the elderly. Here’s the Social Security Administration source. If you look at Table 9B6 you’ll see (left column) that 55 percent of the elderly get more than half their income from Social Security; 33 percent get more than 80 percent of their income from that source.

And if you look at Table 10.5 you see that the elderly in the middle of the income distribution get 66 percent of their income from Social Security, versus 9 percent from private pensions and just 5 percent from assets.

If that’s not the way the elderly people you know live, that’s because they’re not representative.

http://krugman.blogs.nytimes.com/2012/04/20/income-of-the-elderly/

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[ProgressiveProfessor]

1. Any mass statistic like those on income tend to be misleading

If you believe that women make 70% of what men do, then one should also believe that the elderly are the richest group of Americans. Same kind of statistical basis.

The reality is that while the elderly tend to have assets (their home...) their income is much smaller than many realize.

[JDPriestly]

2. The comments are very discouraging.

Young people do not understand that prior to Social Security, it was they, the younger people, who were completely responsible for taking care of parents who did not have enough income to take care of themselves. Imagine trying to put two kids through college or even pre-school, work and take care of mom and dad. How would you manage that?

In addition, no one mentioned that the average Social Security payment is around $1200 per month, maybe a little more now. That is not much (and is why Ryan's plans for changes to Medicare are insane).

Also, some of the comments were written by people who do not understand that, beginning in the year you reach 701/2, a certain percent of your 401(K) will be paid out to you and you will pay taxes on it. The comments about people never leaving their 401(K) money intact are based on inaccurate information.

Yet another thing people never mentioned is that even people in their 50s have a hard time getting a job. If you are over 61 and lose your job, you probably won't be hired by anyone -- not even in boom years.

If you are so lucky as to work for a company or in a job in which you can work to 70, maybe beyond -- like senators and representatives and judges for example -- then you won't even notice that other seniors can't get interviews, much less jobs.

Our system is skewed by the view from the top. Legislators have no idea what is going on because living just on Social Security can never happen to them or anyone they know well. There are no poor people on Meet the Press, and the poor can't afford lobbyists.

Since the poor are without a voice, those poor who mostly or entirely live on Social Security and have nowhere near a million dollars in savings -- are not heard from. They are unimportant and ashamed. Many of those who are silenced by this system were middle class as long as they were working. They continue to think as though they were middle class although they really aren't at all.

The low interest rates are hurting seniors, especially those with $150,000 and less (most have far less) in retirement savings. (Pray tell, how are you supposed to save for retirement when you have two kids to house and feed and educate, your fair share of bad years -- no job or bad health for example -- and you earn at most $40,000 per year in the best years.)

When seniors have income beyond Social Security, they pay taxes. When they don't have income other than Social Security, they don't pay taxes.

Just how little income seniors have will be proved by a review of the taxes seniors pay (or don't pay) for 2011.

Krugman is right. Seniors are suffering due to the low interest rates.

One of the comments mentions that the decline in housing values also hurts seniors -- true. The rise in rents is a source of pain for those who don't own their houses or have been foreclosed.

In addition, here in LA, utility prices have risen as the city (necessarily and not maliciously) has increased the taxes and fees on utilities.

Further, food costs have risen. The rises are hidden by the fact that while the dollar cost does not rise, the size of the container is reduced from say 16 ounces to 14 and then the same price is charged for the smaller container as was charged for the larger one. Now 10-ounce containers are beginning to appear on some shelves. I used to get 25 bags of tea in a carton. Now I get 18 bags of the same tea. So I am paying considerably more for the item.

Seniors are having a tough time, but because so many young people still have no jobs, seniors aren't complaining very loudly. When the economy picks up for young people, you will hear more from seniors. Most seniors want to see their children doing well first and only then worry about themselves.

But the fact is that seniors are suffering at least as much if not more from the economic downturn.

[jwirr]

3. Your first point is so important. Who do they think is going to end up with the bill. And the bills

are higher now than they were then as medicine has advanced and costs more. I actually feel sorry for them.

[cthulu2016]

4. Good post, but wrong on a point

"Krugman is right. Seniors are suffering due to the low interest rates."

Krugman is, throughout his writings, saying the opposite—that the elderly are not hurt by low rates as much as is claimed and that the elderly suffer least from inflation. The reason for both is that Social Security makes up an enormous part of the average elderly person's income.

[JDPriestly]

5. Krugman will have a pension and earns lots of money.

He does not know what the average senior who lives on Social Security period and has a little money in the bank is going through. The low interest rates are eating away at the value of our retirement savings -- which rarely amount to anything close to a million dollars.

I read in the 1990s that the average American retired then with less than $10,000 in savings. I would like to know what that figure is now. It may be somewhat higher but not much.

I am not interested in knowing what the average savings are of retirees. I would like to know what the average individual who is retired has in savings. I would like the number that is not skewed by the retirees who have millions. What do most seniors actually have in savings. I don't think it is much, so the tiny bit of interest that seniors earn on what they do have is not supplementing Social Security at all.

The retired teachers and public employees and union members who had real pension plans and not just 401(K)s and savings accounts seem to be doing well. But there are many of us who were not in the system that accumulated those kinds of retirement benefits.

And lots of people in their 50s and early 60s have spent or are spending their retirement savings and 401(K) money just to stay alive now.