a new take on an old issue: surprising demographics of boomers
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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. How Is the Older Population Changing?. Demographic characteristics Income Health care spending - PowerPoint PPT PresentationTRANSCRIPT
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
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: U.S. Census Bureau.
Age
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: U.S. Census Bureau.
3%
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: U.S. Census Bureau.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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Source: Unpublished data from the Office of the Chief Actuary, Social Security Admin.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
How Is the Older Population Changing?
• Demographic characteristics
• Income
• Health care spending
• Long-term care
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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%
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Author’s computations from the HRS.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Urban Institute computations from BLS data.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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)
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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+
Source: Urban Institute computations from BLS data.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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+
Source: Urban Institute computations from BLS data.
.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Urban Institute computations from BLS data.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Urban Institute computations from BLS data.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Urban Institute computations from BLS data.
55-59 60-61 62-64 65-69 70-74
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Urban Institute computations from BLS data.
55-59 60-61 62-64 65-69 70-74
Urban Institute Retirement Policy Program www.RetirementPolicy.org
How Is the Older Population Changing?
• Demographic characteristics
• Income
• Health care spending
• Long-term care
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Author’s computations from the HRS.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Author’s computations from the HRS.
Note: Medical conditions include arthritis, cancer, diabetes, heart problems, high blood pressure, lung problems, psychological problems, and stroke.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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).
Urban Institute Retirement Policy Program www.RetirementPolicy.org
Composition of Out-of-Pocket Health Care Spending,Age 65+, 2006
Drugs23%
Dental8%
Other6%
Inpatient1%
Outpatient6%
Premiums56%
Source: Johnson & Mommaerts (2009)
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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).
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Johnson and Mommaerts (2010).
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Source: Johnson and Mommaerts (2010).
Urban Institute Retirement Policy Program www.RetirementPolicy.org
How Is the Older Population Changing?
• Demographic characteristics
• Income
• Health care spending
• Long-term care
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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).
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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)
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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.
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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).
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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
Urban Institute Retirement Policy Program www.RetirementPolicy.org
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