Revised U.S. poverty rate rises to 16 percent
There is an unprecedented generation gap in relation to wealth, according to census data that finds the greatest disparity on record between younger and older Americans. The average 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.
This wealth gap is now more than double what it was in 2005, and, after adjusting for inflation, is nearly five times the 10-1 disparity 25 years ago, the Associated Press reports.
These findings are reflected in a recent Millionaire Corner survey that found more than three-quarters (79 percent) do not believe that the next generation will be better off than the current generation, an attitude that becomes more prevalent with age. Seventy-two percent of those ages 41-50 have this opinion, compared with nearly 79 percent of those ages 51-60, and just over 82 percent of those ages 60 and up.
Younger investors, however, are more optimistic. Of the 21 percent of our survey respondents who believe their prospects will not be so bleak, 42 percent were under 40. This age group is also most likely to believe they will better off financially in one year. Of the 32 percent overall who share this rosy forecast, 55 percent are under 40. In comparison, seniors over 60 are the least hopeful about their financial situation in the coming year. Just about 27 percent say they will do better.
The census data tells a downbeat story of how hard the recession hit young adults who are at the mercy of a punishing job market or paying for homes that are now worth less than when they were purchased.
An analysis of census data by Pew Research finds that the median net worth of households headed by seniors 65 and older in 2009 was $170,494, 42 percent more than in 1984 when the Census Bureau started measuring wealthy by age, while the median net worth for younger households was $3,662, down a staggering 68 percent from 25 years ago.
The age-based wealth gap between young and older households widened with the collapse of the housing market, the 2007-2009 recession, and the subsequent decline in the job market. Today’s young adults start out life more burdened by college loans. A new report puts the average student loan debt for recent graduates at an estimated $25,250, an increase of 5 percent over last year.
For older Americans, Pew found, one key change over the past 25 years has been an increase of seniors ages 65 and older who are employed: 16 percent in 2010, up from 10 percent in 1985. But they have the advantage of Social Security as a retirement income stream. More than half (55 percent) of the annual income of 65 and older households is from Social Security.
Meanwhile, the Census Bureau released today its Supplemental Poverty Measure, which is based on how much families spend on food, clothing, shelter and utilities. By this alternative measure, the U.S. poverty rate was 16 percent in 2010, up from the official rate of 15.2 percent released in September, Bloombergreports.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.