The importance of elder law litigation goes hand and hand with unprecedented increase in the population of older adults in the United States. In the next 30 years the number of Americans age 65 or older will nearly double to over eighty million. There are two basic reasons for this explosion. First, we are living longer. Second, the “boom” of births sixty years ago after World War II has migrated into the “boom” of older adults today.
In 2030 when the last baby boomer turns 65, one out of every 5 Americans will be over 65. The results of this change in population have serious consequences both for government, the families of the aging and the aging themselves. Many of these consequences are spelled out in the Pew Research Center’s recent book, “The Next America.” A selection of their reported findings appears in the discussion that follows.
The numbers: As recently as 1900, the average American lived to be just 47. This hasn’t quite doubled, but it’s getting close. For married 65 year old couples, there is now nearly a 50% chance that one of the spouses will live until age 90. Because family patterns have changed as a result of increasing rates of divorce, remarriage, and decline in marriage rates- the elderly are much more involved in child care and they retiring from the work force later. Currently, about one quarter of all children under the age of 5 are cared for regularly by a grandparent and about one in ten live with a grandparent. In the last 20 years the number of those over 65 in the labor force has risen from 10.8% (1985) to 18.5% (2012) according to the Bureau of Labor statistics.
The increasing need for care and assistance: A dependency ratio is the percentage of persons in a community who are not working who depend on those who are. The old age dependency ratio of seniors in the United States is projected to nearly double from 19.5 in 2010 to 35.5 in 2050. That means that in thirty -five years over one third will depend on others to support them. This increase is almost entirely due to the aging of the baby boomer generation.
This increasing dependency means increasing use of the social insurance systems the government has historically provided for the elderly. And, of course, it means increasing financial pressure on the elderly themselves as well as their families.
Much of the pressure falls on the government, whose business is turning primarily into an elder care funding institution – chiefly through Social security Payments and Medicare payments. So let’s look at the impact on Government services first.
Medicare is the primary driver of the increase in government spending for the elderly. Medicare has been for decades the fastest growing program in the federal budget. Medicare rose from 4% of federal spending in 1970 to 16% in 2011 and is on track to reach 19% in 2035, when about half of the United States government’s budget will go to it combined with social security and Medicaid. In 1960, approximately 10% of the federal budget went to Medicare and Social Security. This increased to 30% in 1990. By the time most of the boomers retire, half of the entire federal budget will go to social security, Medicare and the non-child portion of Medicaid.
Still, while Medicare pays medical bills for people over 65, it is not enough to cover the cost of their overall healthcare Medicare covers only about half of the overall healthcare bill of a typical senior between the time he or she turns 65 and the end of his or her life. The remainder comes from the pockets of the seniors themselves or their families unless they qualify for Medicaid. And to qualify for Medicaid, the senior must prove to be below the poverty line and qualify as indigent. Unfortunately, all too many are.
The Economics of Aging: Old age economics is a tale of have and have nots. Most fall in the second category. Social Security remains the life blood of the economics of older adults. For over half of Americans over 65, social security constitutes 80% of their income. Without it, nearly half American seniors would be living in poverty. It is not surprising, then, that when most seniors suffer serious life changing events, they have few resources to cope with them.
But there are also a significant number of haves. Overall, the current generation of those over 65 are the wealthiest group older of the adults in American history. Estimates show that 80% of that wealth will be passed in the future to their adult children after they die. Which children it will pass to is the question for countless families. In recent decades the transfer of this wealth has been transformed by the changes in the relationships between the aging and their expected heirs. Increased rates in divorce, remarriage and step family formation have and will continue to alter this transfer. A MetLife study estimates that two-thirds of the boomer generation will ultimately receive some type of monetary inheritance from their relatives. Researchers estimate that in general this inheritance will eventually amount up to 40% of the wealth of those adults who receive those transfers. With so much at stake it is inevitable that disputes between those who will receive this wealth, and those who will not, continues to increase.