GAO Study Highlights Increased Mortality of Impoverished Seniors

A recently published report from the Government Accountability Office assessed and compared the relationship between income, wealth, and life expectancy of the elderly in the United States, Germany, the United Kingdom, and Canada.

The study chose Germany, Canada, and the U.K. as comparators primarily due to the quality and availability of their data on the subjects being examined. The researchers focused on those aged 55 or older from 1998 to 2019.

The research concluded that wealth and income inequality is greater in the U.S. than the other three countries and that lower income and wealth are associated with lower life expectancy. For example, in 2016, those in the top quintile on average made 13 times more than those in the bottom quintile in the United States. In Canada, this same ratio was 8 to 1.

Each declining income quintile in the U.S. was associated with an increase in mortality. The study tracked populations in their 50s, 60s, 70s, 80s, and 90s in 2002, and measured what percent of each group survived until 2012 by income quintile. For those in their 50s, 60s, or 70s, mortality increased as income decreased, but this pattern did not extend to the 80s and 90s, suggesting that lower income is more predictive of an early death. For example, 68% of those in their 70s in the top quintile in 2002 survived until 2012, whereas only 61% in the middle quintile, and 48% in the bottom quintile.

It also highlighted the impact that Social Security benefits have in diminishing the impact of wealth inequality. When one does not account for the present value of anticipated Social Security benefits, the top wealth quintile on average has a net worth that is 272 times higher than the bottom. However, when accounting for Social Security, this ratio drops to 27 to 1. The wealth ratio from the top quintile to the middle quintile drops from 37 to 1 down to 8 to 1 when Social Security is accounted for. This sharp reduction in inequality is due to the progressive method by which Social Security benefits are calculated.

Their definition of wealth included the value of defined contribution plans and higher wealth households keep a higher proportion of their wealth in financial assets than households in lower wealth quintiles. Though the authors do not state it, this suggests that access to retirement investments might have a disproportionate impact on this gap.

However, female heads of households do not benefit from Social Security as much on average as couples or male-led households. This is because women have a lower workforce participation rate than men, have lower incomes in general, and are more likely to stop working when they start a family. As a result, they tend to receive less in Social Security payments when they retire than men do. This problem is compounded by the fact that women tend to live longer than men.

They also noted that defined benefit plans also tend to reduce the wealth gap between the top and bottom quintiles if their present value is accounted for, but defined benefit plans are becoming less common.

The value of pensions provided by a national government in reducing wealth inequality holds true in the other countries included in the study also. In Germany, the wealth ratio from the top quintile to the middle quintile drops from 13 to 1 down to 4 to 1 when their public pension scheme is accounted for. The study also praised Germany for having national health insurance that covers long-term care for seniors, a program the country began in 1995, and which diminishes the rate at which seniors lose their wealth as they age.

The study was commissioned by Senate Budget Committee Chairman Bernie Sander, D-Vermont, and builds on a similar study from 2019, likewise sponsored by Senator Sanders, which tracked growing income inequality among seniors over time. That study found that income and wealth inequality were more or less stable from the 1940s to the 1970s but have been increasing sharply from the 1980s to the present day, with a few short-term exceptions, such as the 2008 market crash which damaged the net worth of the top quintile more so than the bottom due to their higher exposure to financial assets.

In response to the recent study, Senator Sanders said in a press release that “poverty is a death sentence among older American households.”