By Peter Francese
The image most people have of older Americans needs refreshment. The original concept that this is a largely poor and dependent population is being crowded out by the equally misleading generalization that they are all affluent retirees, living large.
Regardless of these contradictory images, major changes are expected in the near future for this population. While the number of older Americans has increased moderately over the past 20 years, we expect dramatic, unprecedented changes in their numbers and demographic profile.
Post-65 Gender Gap Shrinking
The 2010 U.S. Census counted 22.9 million women ages 65 or older, but just 17.4 million men that age, which means an age 65-plus gender ratio of 1.32 women to men. For these older women, that was an 11.3 percent increase from the 2000 Census. But the number of men rose much faster, up 20.5 percent in that same decade. Chart 1 shows how the growth rates for men and women ages 65 or older will be more than twice the rates that occurred over the past two decades.
By contrast, among adults ages 18 to 64, where there is an almost equal number of women and men, their numbers rose at about the same rates: 11.7 percent and 11.4 percent, respectively. This suggests that the well-known longevity gap between older women and older men, while still substantial, is slowly closing.
On average in 2010, a 65-year-old woman could expect to live another 20 years, about 2.5 years longer than men that age. That gap has been declining steadily for more than 30 years. Back in 1990, that gender gap was nearly four years. At its present rate of decline, by 2020 there may be only a two-year difference between men and women in their age 65 life expectancy.
Any shrinkage of this life expectancy gender gap will be positive, meaning fewer widows living alone, and higher household income from an increase of two-income households (even if only because there would be two Social Security recipients).
Older Americans as a Percentage of the Whole
Americans ages 65 or older were very close to the same fraction of all adults in 2010 (19 percent for women and 14 percent for men) as they were in 2000 (19 percent for women and 15 percent for men). Both Census counts found that one in six adults were ages 65 or older.
The 2020 and 2030 U.S. Census counts will almost certainly reveal a very different picture of older Americans. The set of Census Bureau projections we have chosen (the 2009 low-immigration scenario, which most closely mirrors immigration patterns across the past decade) shows that by 2020 more than one in five adults (21 percent) will be age 65 or older. And just 18 years from now in 2030, our Census Bureau projects that more than one in four (26 percent) of adults will be ages 65 or older.
That big a change in the number of older Americans is bound to have large impact on federal, state and local government agencies, as well as on public opinion. For example, in a recent online poll by the Wall Street Journal, two thirds of 1,200 respondents said they were “extremely worried” about the projected deficits in Social Security and Medicare.
Workforce and (Non) Retirement Trends
But that financial effect on public expenditures may be mitigated if large numbers of Americans older than age 65 choose (or are forced) to stay in the workforce rather than retiring. There is mounting evidence that increasing numbers of Americans ages 65 or older will remain in the workforce, full time or part time, rather than retiring completely at age 65.
There are several reasons why so many baby boomers are inclined to keep working past the age when their predecessors would have stopped. For many of them it is because—except in rare cases—defined benefit pensions have been replaced with defined contribution plans also known as 401(k) plans.
A person nearing retirement with a defined benefit plan doesn’t have to worry that their money will run out. But it can be a big worry for someone with a 401(k), which, unless it is very large, may seem inadequate for maintaining his or her present lifestyle. Recent research from the Employee Benefit Research Institute (www.ebri.org/research) suggests that most baby boomers nearing age 65 have every reason to worry, because in most cases their retirement savings will be inadequate if they live to their life expectancy.
But many older baby boomers have a different kind of asset: a college degree. Almost half of Americans ages 55 to 64 have a college degree (two- or four-year). That education, plus their work experience, will enable them to find work that, because it is not physically taxing, they would be capable of performing well into their 70s.
So the millions of baby boomers who will be turning 65 over the next 10 years have both the means and the opportunity to keep working, but they also have a motive. The motive is grandchildren. Most of them are grandparents who wish to provide extras, or sometimes basics, to their grandchildren—support that the parents cannot or will not provide.
A great many grandparents contribute to 529 college savings plans for their grandchildren. And some also pay tuition for grandchildren in private elementary, middle or high schools, or pay off burdensome college debts.
The Bureau of Labor Statistics (BLS) projects that from 2012 to 2020 the workforce of those ages 18 to 64 will edge up just 3 percent, while the number of people ages 65 to 74 who are either at work or looking for work will jump 58 percent (see Chart 2 for more details on BLS laborforce projections by age). It is this author’s opinion that these BLS projections are too conservative. For all the reasons cited above, the number of people ages 65 or older in the workforce will probably double by 2020.
All of their lives, baby boomers have done things differently than the generation that came before them. There is no reason to think that they would change that pattern just because so many of them will be celebrating their sixty-fifth birthday. As they become older Americans, they are certain to transform and redefine the life stage that starts at age 65
Peter Francese is a demographics and consumer markets expert who started American Demographics Magazine and writes frequently on demographic and consumer trends. His most recent work is a report on American grandparents for the MetLife Mature Market Institute.
Editor’s Note: This article appears in the July/August 2012, issue of Aging Today, ASA’s bi-monthly newspaper covering issues in aging research, practice and policy nationwide. ASA members receive Aging Today as a member benefit; non-members may purchase subscriptions at our online store.