Open thread for night owls: Despite supposed wealth of over-65s, most depend only on Social Security

Dean Baker writes Time to Bury Pew Report on Wealth by Age Group:

A couple of years ago, Pew did an analysis that gave breakdowns of wealth by age group. It found that the median household over the age of 65 had $170,500 in net worth. I was actually pleased that they came up with this number, since it meant that the projections that I had done more than two years earlier with my colleague David Rosnick were almost right on the nose.[...] But what was remarkable about this report was that the Pew researchers took this number as evidence of the affluence of the elderly. The points out that this was a 42 percent real increase from the 1984 level. By contrast, households under age 35 had seen their median net worth had fallen by 68 percent to just $3,700. This disparity in wealth by age continues to be how the take away from this report in the media. Dean Baker To realize the absurdity of this position, try thinking for a moment. The bulk of people who are now turning age 65 do not have a defined benefit pension. (They did in 1984.) This means that the only income they have is their Social Security check, which averages a bit over $1,200 a month. Right off the bat, $100 a month is subtracted to pay for their Medicare Part B premium. This means that our high living seniors have an income of $1,100 a month, plus their $170,500 in net worth. Is this rich? My guess is that 90 percent of the reporters who have covered this Pew study have no clue what net worth means. The $170,000 figure includes every asset that seniors own. That means everything in retirement accounts and other personal savings, the value of their car and the equity in their home. To put this in perspective, the median house price is roughly $180,000. That means that if our typical senior household sold off every other asset they held they would have roughly enough money to pay off their mortgage. Then they would be entirely dependent on their Social Security check to support themselves.[...] When David Rosnick and I did our projections we took this as evidence that most seniors and those soon to be retired (the situation looks worse for those near retirement) were likely to be struggling to make ends meet in their old age. Remarkably Pew has managed to convince the country's top reporters that $170,500 in assets can make a person rich, even when it takes $400,000 in annual income to make a person rich when we are talking about raising taxes. This is truly incredible. [...]

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