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The Truth About Middle Income Older Americans

Tobi Elkin March 29, 2020
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Looking to address the needs of older Americans? You need to know what it means to be middle income and older.

The longevity market often pays attention to older Americans from two perspectives: some are dedicated to the struggles of the poorest older people, and the rest try to tap into the spending power of the wealthiest, with their ample savings and other assets. But what about those who fall somewhere in the middle?

Fortunately, older Americans in this group are getting some real attention, as concerns about  “the forgotten middle” have become more prominent—especially when it comes to housing and long-term care.

If we’re going to effectively address this group’s needs, it’s important to get a handle on exactly what it means to be middle income and older today. 

“The Forgotten Middle” Is Growing Older and More Diverse

If you are middle class, there’s a good chance that you have also reached at least middle age. America’s middle-class population is older than it’s been for a long time.

Our consumer economy as a whole is more divided into haves and have-nots than it has been in decades, but the middle class has shrunk more among younger adults than it has among older ones. In fact, the majority (52%) of those who are middle income have at least reached age 45, according to Pew Research from 2015. Compare that to figures from 2001, when those ages 45 and older made up just 43% of the middle class. 

Older people (both middle class and otherwise) tend to live in the same big-population states that many other groups do. Of the 52 million Americans 65 and older, one quarter live in California, Florida, and Texas. If one, instead, examines the states that have the oldest average age, the picture is very different: in Maine, Florida, West Virginia, and Vermont, at least 19% of the population is over age 65. 

What’s more, older Americans in the middle class and below are more racially diverse than those with higher incomes. The Center for Financial Services Innovation’s report “Redesigning the Financial Roadmap for the LMI 50+ Segment,” which looked at lower- and middle-income adults over 50, found that 13% are Hispanic and 16% are African-American (compared to 8% Hispanic and 6% African-American among high income seniors).

Debt, Savings and Plans to Keep Working

Like millennials and other demographic groups, older Americans struggle with debt and worries over insufficient savings. According to the Stanford Longevity Study, one-third of the Baby Boomers had no retirement savings at all.

Due in part to these low savings rates, Social Security is essential to middle-income seniors, a group defined by the Population Research Bureau as adults 65 and older, whose income is from 200% to 400% of the poverty line. This group relies on Social Security for 52% of their income. (That compares to 76% for low-income seniors, and 21% for those in the highest income bracket and 34% for an overall average.) For the middle-income seniors, the remaining 48% of their income comprises earnings (24%), pensions (17%), and assets and other sources (7%).

Even with Social Security income, many older people expect to continue working into their old age—at a greater rate than previous generations. When Baby Boomers were asked in a 2019 Transamerica Center for Retirement Studies about their retirement, 53% expected to retire after age 65—and 13% didn’t expect to retire at all. A majority (55%) expect to work while they are retired, either full-time or part-time.

The Transamerica results are in line with the findings of a Pew Research study from 2018, which found that Baby Boomers do remain working or looking for work to an extent higher than that of previous generations. For instance, a full 29% of those aged 65 to 72 were still in the labor market, as compared to roughly 20% of earlier generations when they were at the same age. 

As they always have, middle income older Americans defy easy categorization, but it’s clear that in their determination and work ethic, they will be a model for younger generations who will face many of the same challenges, if not more, as automation, AI, and other technologies replace human workers. 

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Tobi Elkin

Tobi Elkin is a versatile New York-based writer, editor, interviewer and advocate with an interest in intergenerational stories, documenting the lives of seniors and helping them share their stories. Her writing can be found at www.tobielkin.com.

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