How Well Off Are America’s Elderly?

Given the aging of the American population and the widening gap between rich and
poor—not to mention the controversy surrounding the future viability of Social
Security—the economic welfare of the elderly is an extremely topical issue.
This report provides a new look at America’s elderly, and shows that the official
measures drastically understate their level of economic well-being.

The conventional measures of well-being do not adequately reflect income from
wealth and net government expenditures. Moreover, in the period from 1989 to
2001, there was an extraordinary increase in income from nonhome wealth, as
well as a widening gap in net government expenditures between the elderly and
nonelderly. Thus, on the basis of the Levy Institute Measure of Economic Well-Being,
which is a more comprehensive measure of income, the economic disadvantage
of the elderly relative to the nonelderly appears to be less severe. Nevertheless,
inequality has continued to widen within both groups.

The results suggest that government policies and programs that favor the elderly
over the nonelderly are misdirected. Rather than cutting back on these programs
or redirecting policy, however, the authors advocate the extension of similar
programs to the nonelderly, such as universal health care, as well as more
generous provisions for the nonelderly in existing social welfare programs.