Inequality In Retirement Is Getting Worse

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How lifelong inequalities add up is one of the hottest issues in academic gerontology. A new book from Boston University professor Deborah Carr, the editor-in-chief of Journal of Gerontology, provides a much-needed reality check on the nation’s plans for dealing with retirement. Titled Golden Years? Social Inequalities In Later Life, Carr’s book brings home a sobering message:  Unless we do something about it, healthy retirement will be a reality only for the privileged few.

The seeds of late-life inequalities are planted early on. Childhood personality factors—such as being conscientious or not particularly cheerful—lead to increased life span. But childhood obesity, no surprise, has been linked to bad economic and health outcomes over one’s life course. Various studies show that the zip code you were in can help predict longevity. Class differences at childhood also play a role. Between two billionaires living in Greenwich, Connecticut, the one who was poor in childhood is predicted to die first, all else equal.

Retirement inequalities also follow broader socioeconomic cleavages. Having lower levels of education, being black, and growing up in financially struggling families are all linked to adverse consequences in old age. These issues include major health problems, heightened risk of elder abuse, and insufficient income to cover even modest food, housing, and medication costs. Women, even if white and born rich, are especially vulnerable to late-life poverty. These inequalities stem in large part from the fact that the wealth accumulation process does not work for most people. Middle- and lower-income workers face more economic shocks throughout their life, from unstable jobs to family and health problems.

For most people in their sixties, working longer into old age to make up for low incomes may be harder than they hoped when they were younger. Work can be an important source of purpose, social engagement, identity and, of course, income for older adults. But the irony is that older adults who can afford to retire young are precisely the people who can and do work into old age, because they have enjoyed the privilege of good health and hold professional jobs that are a good “fit” for aging bodies. Those who control the pace and content of their work are more likely to enjoy their jobs, to be paid well, and to be able to work into their seventies, even if they have some aches and pains.

Most everyone else, more often with limited or no pensions, can’t afford to retire young. Yet many end up leaving the labor force because their employers don’t want them, their jobs are inflexible, or their jobs require young and vigorous bodies. For instance, Walmart is making its greeters be more active, with tasks requiring stooping and bending—a move that many presume is a way to squeeze out the aged and the disabled.

American retirement policy is built on the notion that everyone should enjoy a healthy, rewarding retirement. Yet back in the 1980s, Steve Crystal and Dennis Shea debunked the idea that life gets more equal and more democratic as we approach the most universal of all life processes, old age. When Social Security was expanding, wages growth was strong and pension programs were more robust, economic inequality narrowed in the US after age 65. Benefit programs replaced labor markets as principal income sources. Yet since the 1980s, inequality has been greatest among the aged. As Boston College economist Alicia Munnell has found, deeper income inequality is awaiting today’s workers when they retire.

Current research at the New School’s Retirement Equity Lab finds wealth inequality to be growing immensely. Among workers approaching retirement in 1992, the lowest-earning fifth of the population held only 3% of retirement wealth while the top fifth held 49%. In 2010, the bottom quintile was down to only 1% of retirement wealth, with the top quintile at 50%. Economic advantages and disadvantages create inequality in old age. With no policy to alter the course, inequality among the elderly will only grow.

There is hope, however. Some components of the proposed Social Security 2100 Act, introduced earlier this year by Democrats in the House and Senate, would provide an added boost to low-income older adults by increasing the minimum benefit provided to beneficiaries and raising the annual cost-of-living adjustment to reflect older adults’ outsize medical expenses. That would go a long way in preventing retirees in low-wage work from falling into poverty.

Yet as Carr documents, the picture is not a hopeful one at present. As Carr writes, starkly summarizing much of the current research: “A long, healthy, and prosperous old age is the ultimate reward of economic and racial privilege.”

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