The Diverse Aging Boomers: Who Are They?

Melissa FavreaultThe Urban Institute

January 19, 2006

Who are the Boomers?

• Focus on three comparisons• Early vs. late boomers (by gender)• Race/ethnicity• Education

• Focus on processes that impact work decisions/capabilities• Life expectancy / Disability/Health• Work history / Wages

• Policy needs to account for this diversity

Defining the Boomer Generation

• Born between 1946 and 1964• First wave turns 60 this year• The youngest turns 42

• Currently 77 million people • Slightly more women than men• Gap should increase as the boomers age

Demographics of the Boomers

• Most are married (71.6%)• Divorce is common (15.5% now)• Many have not yet married (10.0%)• Widowhood low (2.8%)

• Will increase as the Boomers age • Affects more women than men

Source: 2005 Social Security Trustees’ report (year 2005 estimates)

How do Early Boomers Differ from Late Boomers?

• Advantage Early Boomers?• Stronger career start for men• Lower levels of Disability Insurance

• Advantage Late Boomers?• More opportunities for women

• Education/employment

• Longer lives• At age 65, the latest Boomers can expect to

live about 1.1 years longer than the earliest

• Wage growth / technological change

Late Boomers Can Expect to Live Longer

49.9

71.6 74.6

56.1

77.6 80

0

10

20

30

40

50

60

70

80

90

1895 FirstBoom

LastBoom

1895 FirstBoom

LastBoom

Life expectancy at birth

Source: 2005 Social Security Trustees’ Report (cohort values)Men Women

Late Boomers Who Reach Age 65 Will Also Live Longer

13.2

17.418.5

17.4

2021.1

0

5

10

15

20

25

1895cohort

FirstBoom

LastBoom

1895cohort

FirstBoom

LastBoom

Life Expectancy at age 65

Source: 2005 Trustees’ Report (cohort values)

Men Women

But, Late Boomer Men are More Likely to be on DI

Source: OCACT data

Males on DI as Percent of Population, by Age and Cohort

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

34 37 40 43 46 49 52 55 58

Age

Pe

rce

nt

on

DI

First Boomers

1955

Last Boomers

Late Boomer Women are Also More Likely to be on DI

Source: OCACT data

Women on DI as Percent of Population, by Age and Cohort

0%

1%

2%

3%

4%

5%

6%

7%

8%

34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58

Age

Perc

ent

on

DI

Last Boomers First Boomers

1955

More Late Boomer Women Stayed Employed during Childbearing Ages

Source: CPS (1962-2004)

Employment Rates, by Age, for Baby Boom Women

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

16 20 24 28 32 36 40 44 48 52 56

Age

Ra

te

First Boomers

Last Boomers

1955

Late Boomer Men Are Less Likely to Work than Early Boomer Men

Source: CPS (1962-2004)

Employment Rates, by Age, for Baby Boom Men

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

16 19 22 25 28 31 34 37 40 43 46 49 52 55

Age

Ra

te

Last Boomers

First Boomers

Late Boomer Women Have Earned More

Source: CPS (1962-2004)

Average Earnings (in 1990$), by Age, of Baby Boom Women who Work

0

5000

10000

15000

20000

25000

30000

16 20 24 28 32 36 40 44 48 52 56

Age

Earn

ing

s (

in 1

990$)

First Boomers

Last Boomers

1955

Late Boomer Men Got off to a Slower Start in Earnings Terms

Source: CPS (1962-2004)

Average Earnings (in 1990$) of Baby Boomer Men who Work, by Age

0

10000

20000

30000

40000

50000

60000

16 19 22 25 28 31 34 37 40 43 46 49 52 55

Age

Ave

rag

e E

arn

ing

s

First Boomers

Last Boomers

Timing of Wage Growth Impacted These Patterns

Source: CPS (1962-2004)

Cumulative Real Wage Growth (Observed and Projected)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

Year

Cu

mu

lati

ve

Re

al W

ag

e G

row

th

What Accounts for Differences between Early & Late Boomers?

• Timing of labor market entry• Later boomers faced greater competition• Technological change, productivity

• Rapid change in women’s roles, timing of life events• Married and had children later

• Policy • DI definitions / qualification rules

How do Boomer Outcomes Differ by Race?

• Fraction of non-whites with higher education and income has increased

• However, racial disparities persist in:• Health / Life Expectancy• Education• Earnings / Economic well-being• Marriage

Boomers’ Health Varies by Race

10.5

18.6

11.9

21.5

0

5

10

15

20

25

White Men Black Men WhiteWomen

BlackWomen

% in Poor Health Ages 45-54

Source: NCHS (NHIS 2000-2005)

White Boomers Can Expect to Live Longer than Black Boomers

17.115.9

20.719.5

0

5

10

15

20

25

White Men Black Men WhiteWomen

BlackWomen

Life expectancy at age 65

Source: U.S. Census Bureau Life Tables (2010 table)

Average Earnings Vary Greatly by Race/Ethnicity for Baby Boomers

Source: CPS (2004)

Earnings (Among Earners) Relative to Whites of the Same Sex, by Age and Race/Ethnicity, 2003

0

0.2

0.4

0.6

0.8

1

1.2

39 42 45 48 51 54 57

Age

Rat

io

Black Women

Hispanic Men Black Men

Hispanic Women

How do Boomer Outcomes Differ by Education?

• Fewer Boomers failed to complete high school than in previous generations• 11.9% of men, 10.3% of women• This is now a quite unusual group

• Those with the highest education are experiencing the greatest increases in well-being in recent years • 31.2% of men, 28.8% of women have

college or more, gap narrows laterSource: CPS (2004)

Boomer Earnings Depend Highly on Education

Source: CPS (2004)

Male Ratios of Earnings of Education Group Relative to High School Graduates, by Age (2003)

0

0.5

1

1.5

2

2.5

3

39 42 45 48 51 54 57

Age

Rati

o

College Graduate or More

Some College

Less than High School

Earnings Dependence on Education is Increasing

Source: CPS (1994, 2004)

Male Ratios of Earnings of College Graduates Relative to High School Graduates, by Age (2003)

0

0.5

1

1.5

2

2.5

3

39 42 45 48 51 54 57

Age

Rati

o

2003

1993

Life Expectancy also Varies Greatly by Education, Especially for Men

14.815.9 16

1718.5

0

4

8

12

16

20

0-11 12 13-15 16 17+

Men at age 65

Source: Richards and Barry (1998, based on NLMS)

Health and Disability Vary Greatly by Education

Source: SSA, CPS

Comparing the DI Population to the General Population Ages 19-64, 2003

0

5

10

15

20

25

30

35

40

Less than hs High school Some college College grad

Education

Pe

rce

nt

DITotal

Life Expectancy also Varies by Education, Though Less for Women

19.6 20.4 21 20.921.9

0

5

10

15

20

25

0-11 12 13-15 16 17+

Women at age 65

Source: Richards and Barry (1998, based on NLMS)

Income Inequality is on the Rise

Source: Census

Mean Household Income by Quintiles, 1967-2001 (in 2001$)

0

20000

40000

60000

80000

100000

120000

140000

160000

1967 1971 1975 1979 1983 1987 1991 1995 1999

Year

Inc

om

e i

n 2

00

1 $

Highest Quintile

Fourth Quintile

Middle Quintile

Second Quintile

Lowest Quintile

Why are Disparities (Education/ Race) so Pervasive for Boomers?

• Differences in: • Human capital• Health care access / treatment• Risk behaviors (smoking, etc)• Household structure• Replacement rates for DI

• Disparate treatment in housing, labor markets

• Cumulative nature of (dis)advantage• Increasingly global labor markets• Wage growth differentials

Vulnerability among the Baby Boomers

• Wage growth reduces overall risk • Groups with highest risk of poverty in

retirement (2025):• High school dropouts (30%)• Racial and ethnic minorities, especially

unmarried, limited education• All blacks (14%)• Unmarried blacks (19%)

• Immigrants (33%)Source: The Urban Institute’s DYNASIM

Vulnerability among the Baby Boomers

• Economic risks in later working years and retirement are associated with certain events• Widowhood• Onset / worsening of a disability• Job loss• Parental / spousal frailty

• Long-term fiscal risk Source: Johnson, Mermin, Uccello (2005)

No Single Policy Solution can Address Boomer Diversity / Risk

• Social Security/Medicare solvency• Earlier resolution means greater

possibility for sharing across generations • Later Boomers arguably at higher risk

• Protection at the bottom important• Reforms may increase retirement ages

• Given life expectancy growth

• Tax policy• Can help address increasing inequality• Low returns to work at older ages

No Single Policy Solution can Address Boomer Diversity / Risk

• Health disparities (access/outcomes)

• Short-term, non-work disability gaps• Need for support to overcome short-term

disabilities

• Stricter anti-discrimination enforcement in housing, employment

Conclusions

• Most Baby Boomers are well placed for successful late-life careers and retirement• Living longer, healthy, relatively well-educated

• Some boomers are at risk for insecurity in late-career and retirement• Less than a high school diploma, unmarried

women (especially if raised children), disabled• Certain events trigger economic difficulties

• Economic inequality is increasing• Challenge is to balance the need for an

adequate safety net for high-risk groups with appropriate incentives for those less at risk

Notes

• Data come from a variety of sources• CPS (1960 through 2004)• Census • CDC/NCHS (NHIS)• Selected literature• Social Security Administration (OCACT, Policy)• Urban Institute’s DYNASIM

• Be careful to consider age and cohort effects as distinct in comparisons• Many comparisons account for age to help

disentangle