cbsnews report
The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday.
While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.
These are shocking numbers. Part of the reason why this gap exists is, from the 40’s to the 70’s Americans were paid a fair wage.
Some more reasons
-Things were still made in the US.
-Union workers were more prevalent and much more powerful.
-Outsourcing wasn’t as pervasive as it is today
-Even if you weren’t in a union, you reaped the rewards of organized labor. Non union workplaces needed to increase benefits to remain competitive with union shops.
-CEO pay was much more modest back then. They made 40x or less back then, today they make 300x what the median worker does.
Before the Reagan revolution, a median wage worker could afford to purchase a house, they could afford to send the kids to school, and they were putting money away for retirement. They did all of this with a manageable level of debt, their increasing wages were able to pay that debt down as they progressed in their careers.
Today, the median wage worker is one paycheck away from living in the streets. They don’t own any assets and they never will. Wages are going down, as the rent is going up- there is no escape from this financial death spiral.
So what does the author think of the wealth gap and what Washington should do with the data?
The report, coming out before the Nov. 23 deadline for a special congressional committee to propose $1.2 trillion in budget cuts over 10 years, casts a spotlight on a government safety net that has buoyed older Americans on Social Security and Medicare amid wider cuts to education and other programs, including cash assistance for poor families.
Hmm. The author seems to be implying that the retired can take a hit in the social safety net since they own assets.
Lets take another excerpt on what this author is really trying to say- here we get a second opinion.
Time for some math. If a young couple has 4000 grand in a savings account, and an old couple owns a mortgage free house that is worth 200,000 I can see why they are worth 47x more than the young worker.
"It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them," said Harry Holzer, a labor economist and public policy professor at Georgetown University who called the magnitude of the wealth gap "striking."
Ahh, It’s so easy, the solution is strip away the safety net, because, the old should be as poor as the young.
The article only cites this one professor, no counterpoint. I can sum this article up thusly. The elderly have a positive net worth- how dare they!
A personal anecdote.
Most people I know can’t afford to purchase any assets. The sad and depressing fact is, the only time these friends got ahead, is when their parents died and they inherited the tiny nest egg that was left behind.
And that’s assuming that the parents died without incurring Long-term-care costs. If you need to pick up the tab for the long-term costs you are going to lose it all.