2011 August 16 Tuesday
Old Age Looking Unaffordable To Many

Middle aged and older folks in California (and likely the rest of the nation) are worried about their ability to afford old age.

California's weak economy has voters cutting back on current expenses and largely unable to meet essential future ones, such as the cost of long-term care, according to a new poll from The SCAN Foundation and the UCLA Center for Health Policy Research.

The poll, in its second year, sought to better understand health and long-term care issues facing middle-aged voters, given the state's current economic crisis and the rising number of Californians older than 60, a figure that is projected to nearly double to 12 million people in the next 25 years.

The poll found that Californians, regardless of political party or income level, were worried about the costs of growing older. Two-thirds (66 percent) of respondents said that they are apprehensive about being able to afford long-term care. Sixty-three percent worry as much about paying for long-term care as they do about paying for their future health care.

They should be apprehensive and they should respond by substantially increasing their long term savings rate. Get out of debt. Cut back on optional purchases. Look for opportunities to learn more skills and make more money. You can't count on promises of governments that are running large deficits and looking to slash outlays.

Here's the most interesting part: 48% of voters 40 and older experienced a decline in household income in the last 12 months.

Voters' ability to save for long-term care expenses is hampered by California's weak economy. Nearly half (48 percent) of voters 40 and older said their household income has declined in the past 12 months, and 50 percent said they had to take money out of savings to meet their expenses. Four in ten (41 percent) have had to cut down on the amount they spend on food in the past year.

I've been making the argument that governments are in deepening financial trouble, partisans who think their guy or their side can fix the economic problems that hold back growth have missed out on how much the economic fundamentals have changed in ways unfavorable to growth, and that spiking oil prices will choke off any economic growth. It is telling that even during a supposed recovery from the last recession nearly half of households say they've stepped down in living standards.

While economist James Hamilton thinks the recent oil price spike wasn't quite enough to put the US economy into a recession he thinks the spike makes the US more vulnerable to the effects of the sovereign debt default risk in Europe (which is threatening to create a bank crisis). But the sovereign debt crisis is itself in part due to oil prices. So some of the shocks coming in to the US economy that aren't labeled as oil price shocks really ought to be. If we had $25 per barrel oil right now the economies of Spain, Portugal, France, Italy, and Greece would be doing much better. They'd send far less money abroad to buy oil, their economies would grow faster, more would be employed, the governments would get more tax revenue from higher incomes, and fewer would be living on the dole.

Share |      By Randall Parker at 2011 August 16 11:28 PM  Economics Retirement


Comments
Jeff Maylor said at August 18, 2011 3:35 PM:

Good. Californians deserve it, especially the White Californians that let their state be taken from them. As a group, they supported massive welfare spending and fat government jobs that they benefited from for so long. These White Californian Baby Boomers are more responsible for the decline of the US than any other group. Enjoy your Alpo.

Winston Smith said at August 20, 2011 4:52 AM:

Death panels are Obama's only visionary idea.

no i don't said at August 20, 2011 10:59 AM:

"Death panels are Obama's only visionary idea."

What about Bush? What about Clinton? What about the previous Bush? What about Reagan?

Except for Abraham Lincoln, all following U.S. presidents have sucked. Big time...

bbartlog said at August 20, 2011 2:40 PM:

Having that many hands available to do elder care would never have been possible, regardless of the degree of saving, without the demographics to support it. Without a large enough younger generation, saving for medical care in retirement is mostly a positional race. Not entirely of course; you can drive up nursing salaries and draw in some people who would not otherwise have wanted to spend their days emptying bedpans. But especially in a wealthy society, the number of qualified people you can draw in to this work is limited.

Mthson said at August 20, 2011 4:49 PM:

Re Bbartlog

The Japanese seem to be on the right track of automating that kind of drudgery.

Gargoyle said at August 21, 2011 8:24 AM:

It's amazing how those Socialist Swedish enjoy abundance and freedom. They have free universal medical care, free universities and they are happier than us...

http://www.youtube.com/watch?v=rxzE8x2pnK4

Jeff Maylor said at August 21, 2011 8:44 PM:

Interesting point Gargoyle about the Swedish (although Bill Maher is a horrible reference). However, Sweden is not nearly as socialist as we tend to think. In fact, they are listed as more free than Germany by the Heritage foundation. They have allowed more free market activity than back in the 1970s. They are also a very high quality population. In addition, they have lived in a Western free market system provided by the US that gave them a ready market to sell to. So, in reality, Sweden is more capitalistic than socialistic. If you have a high quality, high IQ, homogeneous,ethical population, you can get away with more social programs. The US is declining on all those measures.

no i don't said at August 24, 2011 2:25 PM:

"In fact, they are listed as more free than Germany by the Heritage foundation."

Do we still think that the opposite of Socialism is freedom? That's exactly why it is impossible to have a serious discussion about Socialism with Americans.

Well you can keep your capitalist "freedom" that gives you all that illusion of freedom. Just like Carlin used to tell us what the choices of the "free" are: "leaded or unleaded", "smoking or non-smoking", "regular or decaf", "small, large or supersize", "aisle or window", "republican or democrat"...

Some freedom Americans have, hey!! (clap, clap, clap) Hey, as soon as I turn this thing off I'm'nna read me some Forbes or watch some o'ddem Rich and Famous...

"American Freedom" is what the rest of the world calls "Economic Slavery"

Jeff Maylor said at August 25, 2011 2:22 AM:

It will be decades before American could have anything like socialism, because our ethnic diversity makes it impossible. The more ethnic diversity you have, the less interest people have in public altruism (especially the more productive people). Now, at some point, we may get socialism of the Venezuelian variety, because Mestizos will be able to vote in a demagogue. But that is couple generations away and we will be a total sewer by that point. In order to have a blue eyed, blonde haired, socialist utopia, you first gotta have mostly nice productive, ethical high IQ Nordic types.

Mthson said at August 25, 2011 5:56 AM:

Jeff, good points, but a couple generations away, and reprogenetics will make most humans in Western countries high IQ Nordic types.


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