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
• 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)
15
Age 85+
7
4
2
1
17
23
1960
1980
65
Age 65-84
47
31
2000
2020
2040
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
11%
12%
16%
20%
Age
65+
57%
59%
57%
54%
20-64
0-19
32%
29%
27%
26%
1980
2000
2020
2040
Source: U.S. Census Bureau.
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+
3%
8%
5%
8%
3%
6%
9%
9%
9%
14%
Other
10%
Hisp.
88%
84%
76%
67%
Non-Hisp.
Black
Non-Hisp.
White
1980
2000
2020
2040
Source: U.S. Census Bureau.
Urban Institute Retirement Policy Program
www.RetirementPolicy.org
In 2020, One-Quarter of Seniors
Will Have College Degrees
Educational Attainment of Adults Age 65+
9%
9%
16%
4+ Yrs
College
25%
35%
15%
24%
15%
19%
36%
40%
58%
34%
30%
1980
2000
20%
2020
Some
College
High
School
Grad
Not HS
Grad
12%
2040
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+
6%
4%
4%
7%
5%
14%
9%
Never
Married
16%
Divorced
51%
46%
34%
30%
Widowed
40%
44%
48%
45%
1980
2000
2020
2040
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Source: Unpublished data from the Office of the Chief Actuary, Social Security Admin.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+
5%
4%
13%
5%
7%
14%
5%
11%
11%
11%
14%
14%
79%
75%
Never
Married
Divorced
Widowed
70%
64%
Married
1980
2000
2020
2040
Source: Unpublished data from the Office of the Chief Actuary, Social Security Admin.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
40%
35%
35%
30%
Ages 65+
25%
Under 18
19%
20%
15%
10%
5%
Ages 18-64
10%
0%
1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
Source: U.S. Census Bureau (2009).
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
31%
Income as %
of Poverty
31%
33%
31%
18%
21%
22%
17%
24%
17%
8%
6%
5%
White
Afr.
Amer.
< 100%
25%
24%
100199%
Hisp.
Not HS HS
Grad
Grad
4%
2%
Some Coll.
Coll. Grad.
7%
7%
65-74
75-84
12%
85+
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
21%
28%
31%
35%
14%
Income as %
of Poverty
100199%
29%
< 100%
21%
15%
16%
27%
22%
14%
13%
7%
3%
Married
Div/Sep
Widowed
3%
Nev Mar
Men
Married
Div/Sep
Widowed
Nev Mar
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
Constant 2007 Dollars
$50,000
$40,000
Men
$30,000
$20,000
Women
$10,000
$0
1950
1955
1960 1965
1970
1975
1980
1985
1990 1995
2000
2005
Source: Social Security Administration.
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% 93%
90%
84%
78% 78%
74%
66% 68%
56%
55%
1976
46%
36%
29%
25-54
55-59
60-61
62-64
25%
1993
2009
65-69
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
75% 76%
68%
58%
57%
57%
48%
45%
44%
1976
40%
28%
32%
27%
15% 16%
25-54
55-59
60-61
62-64
1993
2009
65-69
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
Real Annual Return After 2008 = 5.5%
Real Annual Return After 2008 = 0.7%
-1%
-2%
-5%
Bottom
20%
Middle
20%
Top
20%
-8%
-11%
-20%
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
12%
10%
8%
All
55-64
65+
6%
4%
2%
0%
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
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
10%
9%
8%
7%
6%
All
55-64
65+
5%
4%
3%
2%
1%
0%
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
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%
7.4%
Not HS
Grad
7.9%
7.1%
HS Grad
4.9%
4.7%
Some
College
College
Grad
55-64
65+
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%
6.9%
6.1%
Not HS
Grad
7.4%
7.3%
5.6%
5.2%
HS Grad
4.5%
Some
College
College
Grad
55-64
65+
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
Not in Labor
Force
Unemployed
75%
72%
66%
63%
50%
52%
Employed
33%
2007
2009
55-59
2007
2009
60-61
2007
2009
62-64
2007
34%
2009
65-69
20%
21%
2007
2009
70-74
Source: Urban Institute computations from BLS data.
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
Not in Labor
Force
Unemployed
65%
64%
54%
54%
41%
Employed
41%
25%
2007
2009
55-59
2007
2009
60-61
2007
2009
62-64
2007
25%
2009
65-69
14%
14%
2007
2009
70-74
Source: Urban Institute computations from BLS data.
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
40%
35%
85+
30%
75-84
25%
65-74
20%
55-64
15%
10%
5%
0%
1983
1986
1989
1992
1995
1998
2001
2004
2007
Source: Urban institute calculations from the National Health Interview Survey.
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
82%
75%
69% 70%
Age
53%
65+
85+
37%
25%
23%
18%
Arthritis
High BP
Heart Probs
Diabetes
20%
Cancer
20% 18%
Psych
Probs
15% 13%
Lung
Disease
18%
11%
Stroke
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
57%
49%
Age
65+
85+
13%
16%
7%
4%
0
3 or More
5 or More
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
58%
42%
31%
19%
<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
$5,345
$3,848
$2,463
$1,959
$1,558
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
Dental
8%
Other
6%
Outpatient
6%
Inpatient
1%
Drugs
23%
Premiums
56%
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+
28%
23%
20%
2001
13%
11%
12%
2005
2006
All
Income Below Poverty Level
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+
19%
15%
12%
10%
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+
45%
35%
23%
18%
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%
1992
43%
44%
42%
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
79%
69%
58%
47%
41%
33%
All
Men
Any LTC
Women
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
16%
10%
Moderate
Disabilities
Severe
Disabilities
4%
49%
36%
2%
24%
15%
< 100%
100-199%
200-399%
> 400%
Income as Percent of Poverty Threshold
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
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Older Adults with Disabilities Hold Less Wealth
than Those without Long-Term Care Needs
Median Household Wealth, by Type and Disability Status, 2002
$25,141
$20,884
Other
$108,815
$98,229
$56,965
$51,723
$71,912
No Disabilities
$4,365
$35,640
$23,587
All
Housing
$7,544
Mod. or Severe
Disabilities
Financial
assets
$7,908
Severe
Disabilities
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)
21
14
10
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
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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
Urban Institute Retirement Policy Program
www.RetirementPolicy.org