The Washington Post continued its war on Social Security and Medicare today with a column by Charles Lane that told readers that seniors are wealthy because they have enough money (almost) to pay off their mortgage. No, I’m not kidding.
Last year, the Pew Charitable Trusts reported that the median net worth of households headed by an adult 65 or older rose 42 percent in real terms between 1984 and 2009, to $170,494. During the same period, median net worth for households headed by an adult younger than 35 shrank 68 percent, to $3,662.
Okay boys and girls, get out your pencil and paper. Net worth counts all the assets that seniors have. This means whatever money they have in 401(k)s or other retirement accounts, savings accounts, the value of their car and the equity in their home. The most recent data on existing home sales show that the price of the median home is now $189,400. This means that if the typical senior household cashed in their 401(k), emptied their saving and checking account and sold their car they would have almost enough money to pay off their mortgage. They would then be able to live rent and mortgage free, but would be entirely dependent on a Social Security check that averages a bit more than $1,200 a month. Yep, that’s the good life. Oh yeah, this is the median, half of seniors have less money than this.
In case you’re wondering about the big gain in wealth since 1984, seniors were far more likely to have defined benefit pensions in 1984 than in 2009. Defined benefit pensions are not factored into this wealth figure.
In his crusade against Medicare and Social Security Lane even gets the poverty data that he cites in his piece wrong. He told readers:
The elderly poverty rate is higher under a different statistical definition designed to reflect seniors’ greater out-of-pocket medical costs, but it still remains slightly below that of the general population.
There are no fact-checkers when the Washington Post decides to bash the elderly. The Census Bureau data show (Table 1) that the poverty rate for seniors under its alternative measure is 15.9 percent. That compares to 15.2 percent for the 18-64 population.
Just for fun, let’s look at the other side of Lane’s wealth story, the 68 percent drop in wealth among people under age 35. This number implies that the median wealth for the under 35 group was around $11,400 in 1984, before the old-timers started stealing all their money. Let’s see, suppose that the average person under age 35 could expect to live another 55 years. This means that their stock of wealth in 1984 would give them about $200 a year to support themselves. Today they can just get a bit less than $70 a year from their $3,662.
Okay, the point of this is that wealth for people under age 35 doesn’t mean anything. What matters for people under age 35 are their career prospects. Do they have a decent job with health care and a pension, can they expect to see a rising income over time? In fact, this picture does not look good right now, but the villains here are people with names like Alan Greenspan and Robert Rubin, not retirees scraping by on their Social Security and Medicare.
Serious people do not use wealth as a measure of the well-being of young people, but Lane is not engaged in a serious discussion. This is about cutting Social Security and Medicare and facts and logic are not going to be allowed to stand in the way.
Correction: Charles Lane points out to me that the Census alternative measure of the poverty rate for all people (including children) is 16.0 percent, which is in fact slightly above the 15.9 percent rate for people over age 65.