Successful Aging: Are older Americans a drag on the economy — or a boost?
The following headline — “Are baby boomers ruining the housing market?” — appeared in a Dec. 5th Los Angeles Times article. The headline implies that older people might be limiting the supply of houses because they are remaining in their homes too long, causing increased housing prices and an overtaxed rental market, suggesting older adults as the culprits.
Fortunately, the article dispelled the headline by referencing studies that found housing prices are more closely related to employment rates and construction costs rather than the demographic shift of older people.
It continues to be important to note that older adults are a national asset rather than a problem. In a previous column, I addressed the subject dispelling the myth of older adults as Greedy Geezers. There is more to say on the subject.
A 2019 report from AARP entitled, “The Longevity Economic Outlook” brings us up to date on the most recent facts on how our older population affects the U.S. economy. Much of this week’s information is based on that report.
Let’s talk about what we know in the form of a quiz. Answer true or false to the following items.
1. People over 50 contribute marginally to federal, state and local taxes.
2. In 2018, those 50-plus contributed about $8 trillion to the U.S. economic activity.
3. The impact of the 50-plus group on the gross domestic product is equivalent to the tenth largest economy in the world.
4. About two-thirds of spending on financial services and insurance is attributed to the 50-plus age demographic.
5. The 50- plus population accounts for almost two-thirds of total health services spending in 2018.
6. In 2018, the 50-plus spent less on technology than those under 50 years of age.
7. More than half of small business owners are over 50 years of age.
8. If we ranked the unpaid contributions of the 50-plus, it would rank among the top 10 biggest state economies.
9. One in ten retirees left the workforce earlier than planned to care for an ill spouse or family member.
10. On an individual basis, the 50-plus population donated $1,400 per person in 2018.
1. False. The 50-plus contribute significantly to our taxes. They contribute 43 percent of all federal taxes ($1.4 trillion) and 47 percent of all state and local taxes ($5.8 trillion).
2. True. The exact number of economic activity is $8.3 trillion. They spent $7.6 trillion on goods and services; that translates to 56 cents of every dollar spent on goods and services.
3. False. The U.S. has the largest GDP, next is China and third is the U.S. 50-plus population. That is followed by Japan, Germany and the United Kingdom.
4. True. As our population ages, retirement assets will need to be managed and the need for financial planning and retirement planning needs will only grow.
5. True. This spending is important for older adults and also is considered critical for employment in the heath sector. One-third of the two million people who had health services jobs in 2018 were over 50 years old.
6. False. In 2018, the 50-plus spent $140 billion on technology compared to $136 billion spent by those under 50 years of age.
7. True. Half of most business owners are over 50. According to the Kauffman Indicators of Entrepreneurship, one out of four entrepreneurs in 2018 were between 55 and 64 years, an increase from almost 15 percent in 1996. Their main impetus to start a business was personal interest or passion rather than necessity.
8. True. The 50-plus population contributed unpaid activities worth $745 billion in 2018 that would rank it among the top biggest state economies in the U.S.
9. False. Actually, one in five retirees left the workplace earlier than they planned to care for a loved one. About seven in ten caregivers changed their work schedules to accommodate caregiving needs. These unplanned exits have financial consequences.
10. True. The 50-plus donated $97 billion in charitable donations. Charitable giving peaks among those 55 to 64 years.
Let’s remember that older adults are the strength of our longevity economy — helping our nation thrive. Each one of us is part of it.