COLUMBUS, Ohio -- A new nationwide study suggests that American adults generally experience less economic difficulties as they get older, even after they retire.
The findings, published in the American Sociological Review, call into question official government statistics which say poverty increases among the elderly. Results showed that 16 percent of adults under age 40 reported frequent difficulty paying bills during the past 12 months, compared to only 6 percent of those age 60 and over. Overall, the study found economic hardships are highest when people are in their 30s, drop progressively through the 40s and 50s and into the 60s, and then level off.
"Despite low income and high medical needs, we found that America's elderly enjoy lower levels of economic hardship than any other adult age group," said John Mirowsky, professor of sociology at Ohio State University.
The elderly tend to have relatively healthy finances compared to younger adults because of their lack of dependent children, stable health insurance through programs such as Medicare, accumulated wealth such as homes, and other factors, Mirowsky said.
Mirowsky co-authored the study with Catherine Ross, also a professor of sociology at Ohio State. Mirowsky and Ross analyzed data from the 1995 Survey of Aging, Status and the Sense of Control, which was a national telephone survey of 2,592 American adults. They also used the 1990 Survey of Work, Family and Well-Being, which was a telephone survey of 2,031 people across the country.
These surveys assessed economic hardship by asking respondents how often in the past year they had trouble paying the bills or didn't have enough money to buy household necessities or medical care. This contrasts with official U.S. poverty statistics which use formulas based on income, number of people in a household, and predicted needs for food and housing to determine who is in poverty. U.S. Bureau of the Census statistics show poverty levels increasing from 7.6 percent of people age 45 to 54, to 11.5 percent of those age 60 to 64. About 10.8 percent of those over age 65 are below the poverty line.
"The government method sounds sensible, but it doesn't really get at how people are dealing with their economic situation," Mirowsky said. "One of the things we found is that there are people who are not poor by the government's definition but who are having trouble paying their bills."
The biggest factor influencing whether people reported economic hardship was not their income level -- it was the presence of and number of children. While it's no secret that raising children is expensive, the study found that children seemed to create a greater economic burden on their parents than the government assumes when it calculates poverty statistics.
"The poverty formula the government uses simply doesn't keep up with the demands of children. Children make much greater economic strains on people than the government statistics suggest," Mirowsky said. "This means a huge financial advantage of being older is that your children are raised and no longer dependent on you."
The study also suggests older people are more likely to have health insurance -- such as Medicare -- which helps reduce economic hardships. Older people are also more likely to own a home, which is one indication of greater wealth.
Mirowsky and Ross also found that people who were retired were less likely to report economic hardships that people who were still working. One reason may be that, even though they may not have a large income, pensions and Social Security are a secure source of income for retired people. In addition, retired people have more free time in which to hunt for bargains, cook their own meals and do household chores and repairs -- all of which save money. "Also, retired people have the benefit of their own knowledge -- they have learned from their own mistakes and those of others and they know how to live frugally," he said.
Another important finding was that marriage provided a large financial advantage to people, he said. One reason is that married couples tended to have higher household incomes than single people. However, even when comparing a married couple to a single, widowed or divorced person with the same income and the same number of children, the study found it was the married couple who was less likely to have economic hardships.
"This is a surprising finding so we don't yet have a firm explanation," Mirowsky said. One reason may be that married people live more carefully and are less likely to be heavy drinkers or smokers than are single people. Also, married people can work as a team to meet household needs such as child care and household repairs, while a single person may need to buy some of these services.
Mirowsky said the results of the study suggest that government programs such as Social Security and Medicare have been successful in helping protect the elderly from financial problems. However, the higher levels of economic hardship among young adults, particularly young parents, suggests that programs such as Aid to Families with Dependent Children may be less successful, he said.
This analysis was supported by a grant from the National Institute on Aging.
Contact: John Mirowsky, (614) 292-2419; Mirowsky.1@osu.edu
Written by Jeff Grabmeier, (614) 292-8457; Grabmeier.1@osu.edu
Journal
American Sociological Review