A New Take on an Old Issue: Surprising Demographics of Boomers

A New Take on an Old Issue: Surprising Demographics of Boomers

Richard W. Johnson Urban Institute

www.RetirementPolicy.org

Presented at the National Human Services Assembly

March 18, 2010

Urban Institute Retirement Policy Program www.RetirementPolicy.org

How Is the Older Population Changing?

• Demographic characteristics

• Income

• Health care spending

• Long-term care


The Older Population Will Soar as the Boomers Age and Life Expectancy Increases

Number of Older Americans (in millions)

17 2331

47

654

7

15

12

1960 1980 2000 2020 2040

Age 85+

Age 65-84

Source: U.S. Census Bureau.


The Older Population Is Growing Faster Than the Younger Population, Partly Because Birth Rates Are Falling

Age Distribution of the U.S. Population

32% 29% 27% 26%

57% 59% 57% 54%

11% 12% 16% 20%

1980 2000 2020 2040

65+

20-64

0-19


Age


The Older Population Is Becoming More Ethnically and Racially Diverse

Racial/Ethnic Distribution of U.S. Population Age 65+

88% 84%76%

67%

8%8%

9%10%

3% 5%9%

14%

6% 9%

1980 2000 2020 2040

Other

Hisp.

Non-Hisp.Black

Non-Hisp.White


3%


In 2020, One-Quarter of Seniors Will Have College Degrees

Educational Attainment of Adults Age 65+

58%

30%20%

12%

24%

36%

40%

34%

9%

15%15%

19%

25%35%

9%16%

1980 2000 2020 2040

4+ YrsCollege

SomeCollege

HighSchoolGrad

Not HSGrad



Widowhood Among Older Women is Declining, but Divorce is Increasing

Marital Status Among Women Age 65+

40% 44% 48% 45%

51% 46% 34%30%

4% 7%14%

16%

5% 9%6% 4%

1980 2000 2020 2040

NeverMarried

Divorced

Widowed

Married

Source: Unpublished data from the Office of the Chief Actuary, Social Security Admin.


A Smaller Share of Older Men Will Be Married in Coming Decades

Marital Status Among Men Age 65+

79% 75% 70% 64%

13% 14%14%

14%

4% 7% 11%11%

5% 11%5% 5%

1980 2000 2020 2040

NeverMarried

Divorced

Widowed

Married

Source: Unpublished data from the Office of the Chief Actuary, Social Security Admin.




• Income


• Long-term care


Poverty Rates for Older Adults Have Fallen Dramatically Over the Past 50 Years

Poverty Rates by Age, 1959-2008

0%

5%

10%

15%

20%

25%

30%

35%

40%

1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007

Ages 65+

Under 18

Ages 18-64

Source: U.S. Census Bureau (2009).

35%

10%

19%


Low Incomes Are Common Among Older African Americans, Hispanics, High School Dropouts, and Adults Age 85+

Share of Adults Age 65+ with Limited Household Income, 2005

5%

22% 24%17%

6% 4% 2%7% 7%

12%

21%

31%31%

33%

24%

17%

8%

18%25%

31%

White Afr.Amer.

Hisp. 65-74 75-84 85+

100-199%

< 100%

Not HS HS Some Coll.Grad Grad Coll. Grad.

Income as % of Poverty

Source: Author’s computations from the HRS.


Unmarried Older Adults, Especially Women, Are Likely to Have Limited Incomes

Share of Adults Age 65+ with Limited Household Income, 2005

3%

14%7%

21%

3%

22%

13%

27%15%

31%

29%

14%

16%

28%

35%

21%

Married Div/Sep Widowed Nev Mar Married Div/Sep Widowed Nev Mar

100-199%

< 100%

Income as % of Poverty

Men Women



Will Senior Poverty Rates Continue to Fall?

• Traditional pension plans are disappearing– From 1980 to 2008, private sector coverage fell from

40% to 20%

• 401(k)-type plans haven’t work very well so far– low participation, investment risks

• Social Security’s full retirement age is rising– From 65 to 66 (for those turning 62 in 2005) to 67

(turning 62 in 2022)– Workers retiring today at 62 get only 75% of full benefits

• Wages have stagnated


Male Earnings Have Not Increased in 30 Years, But Women Are Working and Earning More

Real Median Annual Earnings, Workers Age 50-54, 1950-2005

$0

$10,000

$20,000

$30,000

$40,000

$50,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Co

nst

ant

2007

Do

llar

s

Source: Social Security Administration.

Men

Women


Men Are Now Working Longer than They Did 16 Years Ago, Partly Because of Worries About Retirement Security

Share of Men Working or Looking for Work, 1976, 1993, 2009

94%

84%

74%

56%

29%

93%

78%

66%

46%

25%

90%

78%

68%

55%

36%

25-54 55-59 60-61 62-64 65-69

1976

1993

2009

Source: Urban Institute computations from BLS data.


Older Women Are Also Working Longer

Share of Women Working or Looking for Work, 1976, 1993, 2009

57%

48%

40%

28%

15%

75%

57%

45%

32%

16%

76%

68%

58%

44%

27%

25-54 55-59 60-61 62-64 65-69

1976

1993

2009



The 2008 Stock Market Crash Will Most Affect High-Income Adults

Projected Change in Per Capita Income at Age 67, Relative to No Crash, Adults Born 1951-55, by Income Quintile

-1%-2%

-5%

-8%

-11%

-20%

Real Annual Return After 2008 = 5.5% Real Annual Return After 2008 = 0.7%

Bottom20%

Middle20%

Top20%

Source: Butrica, Smith, and Toder (2009)


Unemployment Rates for Men Age 65+ Increased Sharply in 2009

Average Monthly Unemployment Rates for Men by Age, 1948-2009

0%

2%

4%

6%

8%

10%

12%

1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

All

55-64

65+



Unemployment Rates Also Increased Sharply Last Year for Women Age 65+

Average Monthly Unemployment Rates for Women by Age, 1948-2009

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

All

55-64

65+


.


The Recession Has Hit Workers with Limited Education Hard

Average 2009 Unemployment Rates for Older Men, by Education

12.1%

8.6%8.6%

7.1%7.4%7.9%

4.7% 4.9%

55-64 65+

Not HSGrad

HS Grad

SomeCollege

CollegeGrad



Women Age 55-64 who Did Not Complete High School Are Especially Likely to Be Unemployed

Avg. 2009 Unemployment Rates for Older Women, by Education

9.9%

7.3%

6.1%5.6%

6.9%7.4%

4.5%5.2%

55-64 65+

Not HSGrad

HS Grad

SomeCollege

CollegeGrad



Employment Rates Increased for Men Age 62+ in 2009 because Few Older Men Dropped out of the Labor Force

Labor Force Status of Men by Age, 2007 and 2009

75% 72%66% 63%

50% 52%

33% 34%

20% 21%

2007 2009 2007 2009 2007 2009 2007 2009 2007 2009

Not in LaborForce

Unemployed

Employed


55-59 60-61 62-64 65-69 70-74


Older Women’s Employment Rates Did Not Fall Between 2007 and 2009, Despite the Increase in Unemployment

Labor Force Status of Men by Age, 2007 and 2009

65% 64%54% 54%

41% 41%

25% 25%14% 14%

2007 2009 2007 2009 2007 2009 2007 2009 2007 2009

Not in LaborForce

Unemployed

Employed


55-59 60-61 62-64 65-69 70-74




• Income


• Long-term care


Americans Age 55-84 Were Generally in Better Health in 2007 Than 1983

Percentage of Adults Reporting Fair or Poor Health, by Age, 1983-2007

0%

5%

10%

15%

20%

25%

30%

35%

40%

1983 1986 1989 1992 1995 1998 2001 2004 2007

Source: Urban institute calculations from the National Health Interview Survey.

85+

75-84

65-74

55-64


But Health Problems Are Still Common at Older Ages

Share of Older Adults with Medical Conditions, 2006

75%69%

37%

23%20% 20%

15%11%

82%

70%

53%

18%

25%

18%13%

18%

Arthritis High BP Heart Probs Diabetes Cancer PsychProbs

LungDisease

Stroke

65+85+

Age



About Half of Adults Age 65+ Have 3 or More Medical Conditions

Distribution of No. of Medical Conditions for Older Adults, 2006

7%

49%

13%

4%

57%

16%

0 3 or More 5 or More

65+85+

Age


Note: Medical conditions include arthritis, cancer, diabetes, heart problems, high blood pressure, lung problems, psychological problems, and stroke.


Low-Income Older Adults Are Especially Likely to Report Health Problems

Share of Adults with Fair or Poor Health, by Income, Age 65+, 2006

31%

19%

58%

42%

<100% 100-199% 200-399% >400%

Income as Percent of Poverty Threshold

Source: Author’s computations from the Heath and Retirement Study.


Half of Older Adults Spent Less than $2,500 per 2006 on their Health Care, but 10% Spent More

than about $5,300

Annual Out-of-Pocket Health Care Spending, Adults Age 65+, 2006

$1,959$1,558

$2,463

$3,848

$5,345

Mean 25th 50th 75th 90th

Percentile of the Distribution

Source: Johnson & Mommaerts (2009).


Composition of Out-of-Pocket Health Care Spending,Age 65+, 2006

Drugs23%

Dental8%

Other6%

Inpatient1%

Outpatient6%

Premiums56%

Source: Johnson & Mommaerts (2009)


The Creation of Medicare Part D in 2006 Reduced Out-of-Pocket Spending for Low-Income Seniors,

but Costs Remain Burdensome

Median Pct. of Household Income Spent on Health Care, Age 65+

11%

23%

13%

28%

12%

20%

All Income Below Poverty Level

2001

2005

2006

Source: Johnson and Mommaerts (2009).


Rising Health Care Costs Will Increase Financial Burden on Seniors, Unless Policies Change

Projected Median Pct. of Household Income Spent on Health Care, Age 65+

10%

12%

15%

19%

2010 2020 2030 2040



More Seniors Will Likely Experience Financially Burdensome Health Care Costs

Projected Share of Adults Spending More than 20% of Household Income on Health Care, Age 65+

18%

23%

35%

45%

2010 2020 2030 2040





• Income


• Long-term care


Disability Rates Have Been Declining, But May Soon Increase as Obesity and Diabetes Rates Rise in Midlife

Share of Medicare Enrollees Age 65+ with Disabilities

49%

43% 44% 42%

1992 1997 2001 2005

Source: Federal Interagency Forum on Aging-Related Statistics (2008).


Most People Will Eventually Need Long-Term Care

Pct of People Age 65 in 2005 Who Will Ever Need LTC

69%58%

79%

41%33%

47%

All Men Women

Any LTC Nursing Home

Source: Kemper, Komisar, and Alecxih (2006); Spillman and Lubitz (2002)


Low-Income Older Adults Are Much More Likely To Have Disabilities Than Those with High Incomes

Share of Noninstitutionalized Adults Age 65+ Needing LTC, 2002

49%

36%

24%15%

16%

10%

4%

2%

< 100% 100-199% 200-399% > 400%

Income as Percent of Poverty Threshold

ModerateDisabilities

SevereDisabilities

Source: Johnson and Wiener (2006). Note: Severe disability = 3 or more ADL limitations; moderate disabilities = some ADL or IADL limitations, but not severely disabled.


Older Adults with Disabilities Hold Less Wealth than Those without Long-Term Care Needs

Median Household Wealth, by Type and Disability Status, 2002

$51,723$71,912

$23,587$7,908

$98,229

$108,815

$56,965

$35,640

$20,884

$25,141

$7,544

$4,365

All No Disabilities Mod. or SevereDisabilities

SevereDisabilities

Other

Housing

Financialassets

Source: Johnson and Wiener (2006). Note: Severe disability = 3 or more ADL limitations; moderate disabilities = some ADL or IADL limitations, but not severely disabled.


The Older Disabled Population Will Double as the Boomers Age

Projected Number of Adults Age 65+ with Disabilities (millions)

10

14

21

2000 2020 2040

Source: Johnson, Toohey, and Wiener (2007).


Ongoing Social, Economic, and Demographic Change Will Make Family Care More Difficult

• Family sizes are shrinking

• Childlessness is growing

• Divorce rates are rising

• More women are working outside the home


The Demand for Senior Services Will Increase in Coming Decades

• The older population will soar as the Boomers age

• Even if a “retirement crisis” does not materialize, average incomes in old age will not increase much over time

• Changing family structures will likely reduce family help

• The federal government’s long-term budget problems may reduce public assistance

Documents

A New Take on an Old Issue: Surprising Demographics of Boomers