Wealth gap between old and young

<p>I think the wealth of both the young and old is very low....</p>

<p>US</a> wealth gap between young and old is widest ever | General Headlines | Comcast.net</p>

<p>"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.</p>

<p>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.</p>

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

<p>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.</p>

<p>While the wealth gap has been widening gradually due to delayed marriage and increases in single parenting among young adults, the housing bust and recession have made it significantly worse.</p>

<p>For young adults, the main asset is their home. Their housing wealth dropped 31 percent from 1984, the result of increased debt and falling home values. In contrast, Americans 65 or older were more likely to have bought homes long before the housing boom and thus saw a 57 percent gain in housing wealth even after the bust.</p>

<p>Older Americans are staying in jobs longer, while young adults now face the highest unemployment since World War II. As a result, the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group.</p>

<p>Social Security benefits account for 55 percent of the annual income for older-age households, unchanged since 1984. The retirement benefits, which are indexed for inflation, have been a consistent source of income even as safety-net benefits for other groups such as low-income students have failed to keep up with rising costs or begun to fray. The congressional supercommittee that is proposing budget cuts has been reviewing whether to trim college aid programs, such as by restricting eligibility or charging students interest on loans while they are still in school."</p>

<p>Startling facts, no doubt..especially the net worth of young adults..my 11 yr old has more net worth then the $3662 number above,</p>

<p>That's nice qdogpa.</p>

<p>I don't know how anybody can buy anything with these wealth numbers...ok I am exaggerating..but still...</p>

<p>I find the $170k actually a few low number and is scary for people over 65. My mom is 80+ and has been in her house 50+ years, so there's no mortgage and it's worth somewhere around $225-250k (lower-end middle class DC suburb), plus a reasonable pension rollover. She would not consider herself well-off and lives entirely on her SS and the $6-7k/year mandatory pension rollover payment. </p>

<p>If you assume an asset can generate an annual return of 5% & you can drawn down another 5%/year, that's only $17k to live on. Again, very scary for this generation in light of increasing energy, food and healthcare costs.</p>

<p>I'm not worried that households <35 don't have savings. The ages of greatest wealth accumulation are 35-55 when people are in the prime of their careers.</p>

<p>Net worth for those over 65 does not include the value of social security, medicare, and pensions.</p>

<p>Many of those over 65 are getting significant annual benefit from these (in the tens of thousands of dollars) and that does not show up in the net worth figures.</p>

<p>"If you assume an asset can generate an annual return of 5% & you can drawn down another 5%/year, that's only $17k to live on. Again, very scary for this generation in light of increasing energy, food and healthcare costs."</p>

<p>I think it is scary...</p>

<p>dadinator is right about this...but the elderly also don't have jobs.....</p>

<p>And SS and medicare are under attack....which if successful is going to take some of the elderly's wealth away....</p>

<p>
[quote]
And SS and medicare are under attack....which if successful is going to take some of the elderly's wealth away....

[/quote]
</p>

<p>Yes, this is what worries me. Not for the current, or even my own generation, but my kids.</p>

<p>My mom worked all of her life, but she really needs her medicare now, being 83 and single, and of course, she's not eligible to work any longer (even though she's willing.)
Her SS pays her mortgage, and everything else- house maintenance, food, insurance, etc. comes out of her small investments and savings. It's possible that she'll outlive her savings, and of course she's eating up her investments because the interest rates are nil.
It's scary when we look ahead for our kids. How does one save enough to cover health and living costs for the last 20 years, if they live to be 90?</p>

<p>"Her SS pays her mortgage, and everything else- house maintenance, food, insurance, etc. comes out of her small investments and savings. It's possible that she'll outlive her savings, and of course she's eating up her investments because the interest rates are nil.
It's scary when we look ahead for our kids. How does one save enough to cover health and living costs for the last 20 years, if they live to be 90?"</p>

<p>I am wondering this myself...</p>

<p>You survive by committing a felony,head to jail...healthcare there is great,food not so good..but if you time it right,you can exhaust allmyour savings and spend the last several years in a private room. ;)</p>

<p>:)..................</p>

<p>This may be controversial, however, I think a retired person with modest savings and income should not have a mortgage. (I'm a CPA/CFA, so my professional advice would be this would be the second thing I would have people get rid of in today's low interest rate environment. #1 is credit card debt - worst financial invention out there. If you can't afford it, don't buy it is what I tell my kids)</p>

<p>Why is that controversial?</p>

<p>Looks good to me.....</p>

<p>I hope this study gets a bit more scrutiny by someone that really understands the source data. I can't delve into it, but the findings look a bit too extreme to me. Look at this table:</p>

<p><a href="http://www.pewsocialtrends.org/files/2011/11/2011-age-gap-02.png%5B/url%5D"&gt;http://www.pewsocialtrends.org/files/2011/11/2011-age-gap-02.png&lt;/a&gt;&lt;/p>

<p>They are saying that from 1984 to 2009 net worth declined for several groups of younger households. Households with head age 35 -44, household net worth fell 44% ??? From $71k in 1984 to $40k in 2009 (real dollars)??? That doesn't pass my reasonableness test, and if true, is beyond shocking.</p>

<p>I have to delete this post</p>

<p>Actually, I have to think about this...I might be wrong...</p>

<p>Those numbers are inflation adjusted...</p>

<p>So...has household formation changed?</p>

<p>How much has housing impacted these numbers?</p>

<p>Many People 35-44 probably have seen their home equity wiped out...</p>

<p>US</a> poverty at new high: 16 percent, or 49.1M - Yahoo! Finance</p>

<p>poverty hits new high...</p>

<p>when medical costs are taken into account poverty for seniors goes up..</p>

<p>"A record number of Americans -- 49.1 million -- are poor, based on a new census measure that for the first time takes into account rising medical costs and other expenses.</p>

<p>The numbers released Monday are part of a first-ever supplemental poverty measure aimed at providing a fuller picture of poverty. Although considered experimental, they promise to stir fresh debate over Social Security, Medicare and programs to help the poor as a congressional supercommittee nears a Nov. 23 deadline to make more than $1 trillion in cuts to the federal budget.</p>

<p>Based on the revised formula, the number of poor people exceeds the record 46.2 million, or 15.1 percent, that was officially reported in September.</p>

<p>Broken down by group, Americans 65 or older sustained the largest increases in poverty under the revised formula -- nearly doubling to 15.9 percent, or 1 in 6 -- because of medical expenses that are not accounted for in the official rate. Those include rising Medicare premiums, deductibles and expenses for prescription drugs.</p>

<p>"As seniors choose between food and medicine, some lawmakers are threatening lifeline programs that provide a boost to those in poverty or a safety net to those grasping at the middle class," said Jo Ann Jenkins, president of AARP Foundation, which represents the needs of older Americans. "With nearly 16 percent of seniors already living in poverty, our country cannot afford to slide further backward."</p>

<p>Working-age adults ages 18-64 saw increases in poverty -- from 13.7 percent to 15.2 percent -- due mostly to commuting and child care costs.</p>

<p>And for the first time, the share of Hispanics living in poverty surpassed that of African-Americans, 28.2 percent to 25.4 percent. That is due to a jump in the poverty rate for Hispanics under the new measure because of lower participation among immigrants and non-English speakers in government aid programs such as housing and food stamps."</p>

<p>dstark,
if only to save me from going into a full-blown depression (and also to see if we can catch the upswing, if and when it ever comes, and learn this time how it develops), can you please start a thread about the pieces of GOOD NEWS and GOOD NUMBERS/TRENDS coming in about the economy? Invite us all to contribute!!</p>

<p>That would really be interesting IMO. (smile)</p>

<p>This is all I could find:

[quote]
The poverty line is defined under the official measure as $11,139 for an individual, or $22,314 for a family of four.

[/quote]
</p>

<p>The obvious question: Is income the only determinant of "poverty"? Are assets not considered? The original discussion here concerned household WEALTH. So apparently seniors, or households with older heads, have valuable assets but low income. This is one very obvious product of a zero interest rate environment. (I could almost insert "duh" here) so the findings of both higher wealth and higher poverty among seniors are not inconsistent.</p>

<p>As pointed out elsewhere, ONE MILLION DOLLARS invested at one percent earns only $10,000 per year.</p>

<p>I think in the poverty study..income is it...</p>

<p>I saw this today...and with the talk of cutting SS and medicare...</p>

<p>retirement-cristis-closes-baby-boomers-reuters:</a> Personal Finance News from Yahoo! Finance</p>

<p>"Baby boomers are members of the first generation since the 1930s who will be worse off in their older years than their parents, says Teresa Ghilarducci, a retirement specialist and economics professor at the New School of Social Research in New York.</p>

<p>"According to our projections, it looks like most middle-class workers, not just low-income workers but most middle-class workers, will be living at or near the poverty level in their old age," Ghilarducci said in an interview.</p>

<p>"This is the first time since the Great Depression we are looking at poverty rates increasing among the elderly."</p>