U.S. Wealth Gap Between Young, Old Is Widest Ever

[highplainsdem]

Source: AP

WASHINGTON -- 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 Monday.

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.

-snip-

Read more: http://www.huffingtonpost.com/2011/11/07/us-wealth-gap-young-old_n_1079372.html

[Sarah Ibarruri]

1. But do they take into account the poverty so many seniors are enduring?

That they can't afford medicines, rent, food, etc?

I'm sure they're not. I've seen plenty of seniors who are going through a living hell at a time in their lives when they're sick and unable to get any further money.

[CTyankee]

3. The simple fact is that seniors, overall, have had a lifetime of hard work to

build what pitiful equity or wealth they have. Most seniors I know did this and they live in modest homes while paying ever-rising local taxes and trying to afford the cost of good, but not fancy, food and having enough money to afford heat in the winter.

[Sarah Ibarruri]

5. That's been my experience. Maybe the seniors in the 1% are doing just fine, but...

the seniors I know, don't have enough to supply their much increased needs, and our country is so behind the times, and so right wing, that there's no health care to provide nurse assistants to visit them daily, or even once a week. This savagely oligarchist country is frikkin out of control. Which is why the OWS movement is so vitally important.

By the way, I love what you say in your profile: pro choice and pro child. Bravo! I agree. It's the anti-choicers that hate kids and don't really care a rat's ass what happens to live children.

[CTyankee]

7. Thanks, I worked for Planned Parenthood before retiring at the end of 2004.

With 2 daughters and 3 granddaughters, choice is dear to my heart as a cause.

This is just another attempt to turn members of the 99% against each other: young against old, "illegals" against legal immigrants, English speakers against non-English speakers, non-union workers against union workers, workers in the private sector against workers in the public sector...the list goes on...the oligarchs tremble at the thought that the 99% will get together and smash the system. This is why you see articles like this now. We've already been thru the union vs. non-union mash up (still are, too), this is another. They aren't fooling me...

[Sarah Ibarruri]

8. Not fooling me either. And I'm very outspoken about all this. I have no respect for anti-choicers

None at all.

But yeah, Repukes sure know how to 'work the system' with the sheep, don't they?

[BeyondGeography]

14. Can we stop reducing everything to a 1% story, please?

It's far more than just the top 1% of older Americans who have done well in this country. They had more opportunity for secure, stable employment and much lower overhead costs than people in their 20s and 30s today. If they stayed in their original home, they were probably able to sell it for 5-10 times more than they paid for it and pay for their retirement home mostly in cash. They are far more likely to have a pension plan. They are far less likely to have gone into debt to pay for their children's' education. In short, riding the postwar economic tiger was available to far more than 1% of the population. These numbers tell an important story which the 99-1 line does not reveal.

[Sarah Ibarruri]

16. My point is, that when one is on the top of the hill, everything looks SO PRETTY....

but here, down below, I'm watching seniors struggling at a time in their lives when they need MORE care, MORE money, MORE medicine, MORE health, and in this country, they're getting less of everything.

That is my point.

As for the 1%, it's generalized to be sure, but it is a good way to summarize what has happened here in which the WEALTH of the nation was redistributed through right wing and libertarian principles of big-fish-eating-little-fish.

I don't think what's been done to people is funny, acceptable, ethical, or the sign of a good country at all.

[BeyondGeography]

17. Me neither

What bothers me about these stories (and it has nothing to do with your characterization) is that they do tell a story of profound change, but zero perspective is included. When you have the time, check out this Elizabeth Warren video (The Coming Collapse of the Middle Class):

http://www.youtube.com/watch?v=akVL7QY0S8A

Basically she got a hold of a government economist and they developed comparative pricing models for nuclear families in 1971 and 2008. Long story short, the essentials (housing, health care, education, food, transportation, etc.) ate up 50% of the average family budget 40 years ago and 75% today, and that's with the extra income of the working wife. So people go into debt to make up the difference. We have unleashed Conservative economic principles on everything that is not nailed down, making it much harder for people to save and build wealth than used to be the case. It's a stone rolling down a hill, but don't hold your breath waiting for either party to address it in any meaningful sense.

[JDPriestly]

20. That is a great video.

[Sarah Ibarruri]

22. I agree with you.

And this trend of conservative principles has proven more than damaging to families, to seniors, to students, to everyone who isn't (and I know you hate the use of this, but it is the ONLY WAY TO START A DISCUSSION IN THIS COUNTRY THAT WILL FOCUS ON THE REDISTRIBUTION OF WEALTH TO THE TOP), the 1%.

[BeyondGeography]

27. Fair enough

:thumbsup:

[backtomn]

36. You miss the point completely.....

while there are those over 65 that are struggling, the system is largely set up to transfer money from the young to the old. Free health care and retirement paid for by the young.....young people that may never see those benefits. You can't have a system like SS that started at a time when retirement age was 65 and average life expectancy was 61.7 (meaning most people received NO SS), but now has retirement still at 65 and an average life expectancy of nearly 80. We have gone from an average person getting no SS to the average person receiving it for 15 years......not terribly sustainable. Under this system, people under 50 are pouring money into retirement for others.....and a retirement we might never see.

I don't agree that these are "conservative" principles.....how about common sense. Something has to give.

[Sarah Ibarruri]

40. They are right wing principles, not just conservative. When you have corporations and the rich

paying 0 taxes, and the subsequently bankrupt govt borrowing from SS to pay everything, what do you expect?

[No Elephants]

46. Disagree. Please see Replies 42 and 44, among others on this thread.

[JDPriestly]

19. We could not even qualify for a house until we were in our mid- to late-forties.

So if young people today can't qualify for a mortgage, that is perfectly normal.

And when we were in our 20s and early 30s, we could not get decent jobs either. In fact, my husband had a PhD and could not get a job at all. So, the more things change, the more they stay the same. You learn to save.

The income on $170,000 per year is next to nothing. If your parents have that much in savings, you had better hope that someday they leave it to you. That is how you can buy a house and get your start.

But I would bet your parents don't have that much money. The way they figured that number is quite puzzling to me.

In the 1990s, I studied the ERISA law and read that, at that time, the average person retired with maybe $12,000 in savings. Something is wrong here.

Figure it out. $170,000 is 10% of $1,700,000. Divide that by a working life of 40 years, and this mythical retiree has to have saved $42,500 or close to that per year of their working life. Considering that a lot of people earned minimum wage of $1.25 to $8.00 per hour for many of those years, I'd say the numbers are way off. Investments have not been that profitable in the past 40 years.

Check my numbers, and see if you get a different result. In any event, the $170,000 must figure in the 1%, the Warren Buffets, as "savers."

[MedicalAdmin]

25. But it is a 99/1 story. It is very much so.

Those of the middle class of that era had strong unions and the rich 1% paid their fair share.

This, more than anything allowed some of the middle class to benefit. If you combine that with the facts that the poor die earlier and that old people just pass away, what you have left is a demographic that benefitted. One should also factor out that housing prices are crashing.

This is straight up agitprop.

[plumbob]

26. The postwar economic tiger was created by a 92% top rate on income tax,

the GI Bill, and VA home loans.

Yes, all government programs, and all completely recreatable right now. No reason to limit the education and home loans to veterans, either.

[No Elephants]

45. Lord, I hope we can't. Your Reply 17--the collapse of the middle class--is very much about the 99%.

Please see also Replies 42 and 44.

[RKP5637]

50. Many seniors I know might have their homes and some assets, but they are

far from wealthy. The cost of living is escalating and many have fixed incomes ... and most investments are now too risky ... and other traditional forms of investment for seniors are now ridiculous.

[freshwest]

33. Apparently not.

[totodeinhere]

34. They are talking about averages. Yes there is poverty among the senior generation,

but what they are talking about is a gap between wealth held by seniors and young people. Couldn't I just as easily ask did they take into account the poverty so many young people are enduring? Actually, the age group with the highest poverty level is children under 18.

I agree that it is not useful to pit one generation against another. Obviously the ideal situation would be for all age groups to be doing well. That is what we need to work for.

[CTyankee]

2. Joe Scarborough blames it all on AARP.

Of course! We could see THAT coming a mile away...why am I not surprised, Joe?

Another "reason" to dismantle Social Security and Medicare...

[JDPriestly]

6. This is abuse of statistics.

Seniors have more heart disease too. What has that got to do with anything?

What you have at the age of 70 is pretty much all you will ever have.

What you have at the age of 35 is hopefully just the beginning of what you will have.

We bought an inexpensive house when we were young but had to sell it because we could not afford it. Then we did not qualify for a mortgage until I was 45.

Seniors who have more were either lucky or scrimped and saved all their lives.

As long as we continue to have Social Security and Medicare, the seniors' wealth will go to their children one of these days.

This report is utterly misleading. See my post below.

This is like reporting that cows moo and acting shocked and surprised.

It is anti-Social Security and anti-Medicare propaganda.

If Social Security and Medicare benefits are reduced, young people will have less opportunity to save than ever, because they will have to take care of their parents rather than save themselves.

Some underling of Pete Peterson (Geithner's mentor at the Fed) wrote this piece. For shame.

[No Elephants]

47. I posted Reply 42 before reading this post. So, color me unsurprised.

[JDPriestly]

4. A young person has the capacity to earn money in the future.

A senior does not. Even if you have more money in the bank as a senior, you aren't earning any interest on it.

This is how it should be. This means that American seniors saved when they were younger.

Those who are young now will be able to save and do well in the future.

This report is like saying the sky is blue.

If you average out all seniors including Warren Buffet and the Prince of Wales and Dick Cheney, of course you get numbers like this. But if you take the median wealth, it is pretty low.

A senior who is retired has all his money in his savings. You can count it.

A young person has not yet had the time to earn and save.

This report is misleading and ridiculous.

Of course, you have more equity in a house at the age of 65 (if you did not refinance) than you do at the age of 35. We had utterly no equity and just barely survived from paycheck to paycheck when we were 35. Our current income consists of Social Security. We saved but receive no discernible interest on our savings.

This report is intended to divide the generations.

It is based on false premises and worthless.

This sentence from the article is key:

The median net worth of households headed by someone 65 or older was $170,494.

http://www.huffingtonpost.com/2011/11/07/us-wealth-gap-young-old_n_1079372.html

Let's assume that is true just for the sake of determining the income of a person with a net worth of $170,494.

Included in the $170,494 is the resale value of the person's house -- let's say $70,000. The senior will not receive any income on that although if the mortgage is paid off the senior will just pay the property taxes, say $2-3,000 per year and repairs and maintenance, say $2-3,000 also per year. So you have to subtract minimally another let's say $5,000 per year from the savings.

That brings the actual amount saved down to around $95,000 per senior. The current interest rate is, at best, maybe 1.5% but more likely it is 1%. Riskier investments are not advisable for seniors so it is unlikely that a senior will get more.

Let's give the senior 1.5% interest. Wow! The senior receives a total income of $1425 per year from his "wealth." That's his total income outside of Social Security. The Medicare co-pays add up to more than that.

This is a big fuss about nothing. It is just intended to upset young people.

[DaveJ]

9. This is not normal, according to the article anyway...

"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."

What is happening now, is, lenders are realizing they can hook kids into debt. They race against one another to get them at the earliest age possible. Of course, this results in indentured servitude and is why financial companies have all the money.

Forty years ago I don't think credit cards existed like they do now. If they did you had to have very stable collateral to get one. Thus it was the norm to save back them. Now it is the norm to be in debt, and as a result, unable to save, since it usually makes little sense to save money until debt is paid off.

[JDPriestly]

13. I graduated from college without debt because I worked 20 hours per

week for minimum wage the whole time. I went to a state school, and it was, at that time, subsidized by tax money.

We should all pay higher taxes and support offering education at lower tuition for young people.

True, we did not have credit cards back then. But if you are a senior and have savings, it is probably because you never used credit cards much. We always pay ours off at the end of the month. You would probably be shocked at the low level of our living standard.

And in spite of our penny-pinching, we have very little money as seniors and earn almost no interest on what we have.

The article is misleading. If you use credit cards, stop. Because you will never be able to save if you as a young person fall into the credit card abyss.

[DaveJ]

21. Egregious lending to young folks should be outlawed

I understand every generation has had its tribulations, like not being able to grow up with iPads, microwaves, central air, etc. My uncle talked about how he snuck into a hen house and slurped up eggs like they were treats. Ew. People who grew up in that era, worked hard, and saved, deserve a luxurious, comfortable, worry free retirement, no doubt.

Now we have a different tribulation, and it's a big one: indentured servitude. One would think that our government would stand up for the people and say, "We're the land of the free. It should be impossible for any American to become an indentured servant. Even if it's perceived as their own fault. We won't have it." But instead of doing that, our government bailed out the banks and basically said, "Yeah we kind of like this indentured servitude thing. It keeps people working hard and maintains our high salaries." That is the problem we face today.

We outlawed advertising cigarettes to kids. We could also outlaw utterly ridiculous loans to people who are not acting in their own best interest, and then making those people owe for life. People make mistakes. They will always make mistakes. They will never stop making mistakes. We should not have industries with a vested interest in profiting off people's imperfections.

My idea would be to outlaw any loan that would take more than two years to pay.

[JDPriestly]

23. I agree. No consumer or educational loan should take longer than

two years to repay.

I know all about the indentured servitude. I went back to school when I was 50, got a professional degree and, in recent years, have not been able to get a job that would allow me to repay all my loans.

Seniors who would like to work suffer just as much as younger people from the lack of jobs.

Believe it or not, the Supreme Court ruled that they can take my loan payments out of my Social Security. Student loans cannot be discharged in bankruptcy. It is a total scam.

I would like to respond to your story about the boy who raided the chicken house.

My husband grew up in post-WWII Europe. His present for his 6th birthday was getting to eat one egg all by himself without sharing it with anyone. That was the totality of his presents for his 6th birthday.

He has said that he was utterly thrilled with it.

I am not telling this to make anyone feel guilty about what they have had or to make them feel sorry for our generation. But it explains why our generation saved and younger people have not been able to save.

My husband and I are apprehensive about spending money and averse to spending or charging money we don't have. That is because we were very poor as children. That is why we always saved. We did not want to be poor again.

We still save. We do not eat out, not even at McDonald's. We wear old clothes until they fall off of us. Etc. Lessons learned from impoverished childhoods. Frankly, an impoverished childhood, to the extent it makes you thrifty later on, is a blessing. But you may have osteoporosis and other diseases due to malnutrition as you age.

[NickB79]

37. Even working full-time, it can be hard for young adults to put themselves through college

I, like you, graduated from a state school without debt. I also did just what you did, working 20 hr a week (30-40 during the summer months), barely used my credit cards, and got Pell grants and a few small scholarships to get by. This also wasn't all that long ago: I graduated in 2003.

Today, when I talk to family or children of friends who are starting college, I'm told that most of the grant money is gone. Tuition costs have risen faster than inflation. Young adults can't find jobs, even at minimum wage, because so many older people are taking them to make their own budgets work. Mom and Dad can't give much, because they're just trying to pay their own bills. Basically, student loans are the only way to go to most colleges now.

[ArcticFox]

38. I think you miss the point

the stats are showing that those of us in the 35 age range are comparatively worse-off than were, e.g. our parents when they were our age.

It's not about whether we worked during school; cost of education nowadays makes a loan mandatory to attend the same school as was practically free 40 years ago.

It's also not about a lifetime of work. Having begun our careers in a huge hole, we will have great challenges saving, throughout our lives.

Being in debt limits our options - we can't take the risk of starting a business with multi-hundred dollar monthly payments, even if we could accumulate capital to do so.

In large part the younger generations are just staying afloat, whereas their elders were paid better, AND had such quaint things as health insurance.

[LeftyMom]

39. See, this is the problem.

People your age figure that because they did X, that young people now can do X and be equally successful. You worked 20 hours a week and graduated with no debt. Good for you. But here's the deal: the ratio of hourly income to college expenses is enormously different now.

I know many people of my parents generation who worked over the summer and had perhaps a small job during the school year and graduated from state schools with no debt. There's a big difference though: they paid less for a year's tuition than today's student pays for textbooks. Why? Because THEIR parents' generation subsidized public colleges to the point where tuition was free or a token amount, and housing was very cheap (this was back when the state universities had enough dorms for students who wanted them, and apartments near campus didn't cost more than a starter house's mortgage,) and a summer job at a cannery or in a factory or something (back when those sorts of jobs were easy to get for a few months) would cover most of their laughably small living expenses.

So people who benefited from a significant investment by a prior generation and then voted not to pay that forward (and instead to vote themselves bread and circuses in the form of wars on credit and medicare boner pills) now wonder why their lazy kids can't pay for all that and a $100K college education on a $10/hr student job without going into debt.

[cottonseed]

29. "This report is like saying the sky is blue." -- No it is NOT saying that.

It's saying that historically there was a 10-1 disparity. Today there is a 47-1 disparity. Something is broken.

[Odin2005]

10. Us young folks were sold a load of goods about college that turned out to be crap.

Now we have people with Master's degrees flipping burgers.

[Jennicut]

11. I am 35 and lets just say that most people I know my age have a lot of debt.

Debt from college loans throughout your twenties and of course we rely way too much on credit cards. Mortgages and car payments and insurance and medical expenses (I am a type 1 diabetic). We also have two daughters that are 6 and 7. I think some of us in our thirties and twenties get ourselves in trouble. And we want everything now as opposed to saving for it. But yes, my husband and I live paycheck to paycheck with no real savings. So does my sister in law and her husband and my brother and his wife. My parents have tons of savings and money in stocks. Hopefully we have some time to save for retirement someday. My parents were smart and didn't spend money they didn't have.

[slackmaster]

12. I wasn't able to buy a house until I was almost 37

I was flat broke at 40 due to a divorce.

:argh:

[JDPriestly]

15. Divorce is a huge money-loser.

Attorneys' fees, time spent wrangling and then losses when you divide your assets and debts.

Try everything, anything before going to divorce court. A divorce looks deceptively easy. Just forget it.

Two can live cheaper than one.

[slackmaster]

30. We did it without attorneys and still both ended up worse off in the long run

I kept the house, paid her half of the equity. Split everything else right down the middle.

She took the money, bought a house, leveraged equity, bought a second house. Now she's underwater on both houses and can't pay her bills.

I've been much more careful with credit, but have very little in savings to show for my frugality.

[joeglow3]

32. Delayed Gratification: number 1 skill I try to impart to my kids

My wife and I have both done that and we have always lived waaay below our means. Sadly, this is not stressed enough (we all NEED the new Iphone and unlimited plan for only $100 a month, after all).

[Cirque du So-What]

18. As one hurtling headlong toward 'retirement' age, I'm not hoarding any wealth

In fact, I will plead with those fortunate enough to afford throwing away food to look kindly upon me if they discover me rifling through their garbage as I look for some measly crumbs. I promise not to make a mess and to go away promptly!

[brentspeak]

24. There was a large prosperous middle class until the GOP and corporate Dems sold us down the river

to enrich themselves and their wealthy puppet-masters.

[vkkv]

28. Not every 67 yr old was a high paid CEO

What a ridiculous article!

It FAILS to point out that BACK when these older people were working / making money the hard way - The INCOME RATIO WAS MORE BALANCED! Now you have CEO's making 500 TIMES what their lowest paid employee makes. It IS A FACT that WAGES HAVE NOT INCREASED OVER THE DECADES - WAGES HAVE DECREASED PROPORTIONATELY.

This article is fails to tell the BIG picture and blames the over 67 crowd for accumulating hard earned wealth / property - not every 67 yr old was a high paid CEO. They are mostly better paid Blue Collar workers that made relatively more money back in the 50's, 60's and 70's before corporate greed kicked in during the Reagan 80's.

This article reads like a GOP propaganda piece.

[bluestateboomer]

31. I don't know anyone who wants their kids to starve.

The truth is that seniors are not the ones taking money from the young. There are many who are doing there best to help when there children get in trouble. How many college grads have to move back in with mom and dad? Most seniors have built a small nest egg (social security included) which will probably not be getting much larger. That nest egg will need to be used carefully to avoid spending your last days in poverty. Seniors did not create the wealth gap. They should not be blamed for the struggles of the younger generation. The majority, the 99%, all ages, should be uniting to bring the country back to a more balanced and equitable economy.

[totodeinhere]

35. I didn't get the impression that the article was casting blame on seniors. It was merely

saying the statistically the wealth gap between young and old has increased. That doesn't mean that all seniors are rich. But if the wealth gap really is increasing it is a useful statistic to keep in mind.

[No Elephants]

44. Probably very explicable by the fact that our laws keep getting worse for the 99%.

Also, the economy since 2007 would, of course, have hit people under 35 harder than people over 65, much fewer of whom have been looking for work during the last four years. And other factors along those lines.

Please see also Reply 42.

[WildEyedLiberal]

41. You know shit's fucked up when DU comments read exactly like Yahoo news comments

"Lazy ass kids expecting everything for free with their brains rotted out by iPods and video games! If they work hard their whole life like the seniors did they can have it all too! Back in my day I delivered papers in the morning and paid for my degree out of pocket!"

Yeah, well, that was before college - STATE college - cost 15k a year not including housing. The ratio of increase in wages to increase in tuition is something like 1:50, and yet we're just supposed to be able to buck up and pay for college with our part time job at Joe's Burger Shack? Really? And after all that hard work and investment, we graduate, only to find out that there ARE NO JOBS? So it's back to work at Joe's Burger Shack with our BA (or sometimes MA or PhD or JD) gathering dust in the closet. And you want to tell us it's the same as every other generation has had it?

Bullshit. I guess I wish I were surprised that DU shows no more empathy to young people than the teabaggers at Yahoo news, even though supposedly DU cares about unemployment (we are the most unemployed age group in America, at around 15%) and poverty (also the poorest, as 37% of us (read an article on MSNBC earlier with the stat, don't have a link offhand) have NEARLY ZERO NET WORTH). And then you call us lazy entitled spoiled brats who are just too obsessed with our iPods and Xboxes to go get a real job (WHAT "real job"?) and wonder why we resent the shit out of the older generations who scream and wail about their situation but apparently don't care if the future of this country flounders away in poverty?

Yeah, well, fuck you too.

[No Elephants]

43. Sometimes, distinguishing between far right and center right cam be very tricky.

[No Elephants]

42. This reeks of folks trying to turn anger away from the rich and toward seniors and their damned

Social Security and Medicare.

of course people who have worked a lifetime as housing prices went up and up are going to have more than folks under 35, duh.

Eespecially if the folks under 35 went to college and/or grad school and are up to their earlobes in student loan debt those over 65 did not have to face because tuition was not so outrageous back in the day and student loans were given by the feds at more reasonable interest rates.

Also, student loans were dischargeable in bankruptcy then, too.

Once the banks got hold of the loans and colleges and universities got greedy, a lot changed.

[BeyondGeography]

48. Well, what's also strange is people of a certain age who can't admit they've had built-in advantages

It was easier for college graduates to find work 10, 20, 30, 40 years ago.

It was cheaper to get a college degree.

It's always better to start out life without a pile of student loan debt.

It was easier to build wealth when housing was affordable.

It was easier to raise a family when health care and education were affordable.

Instead, you get lectures about how one guy lived off an egg a day, and that's how you save money.

[Amonester]

49. k & r

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