It sounded like a heck of a story–too bad the facts get in the way.
The press release proclaimed that “taxes, not health care, are retirees’ biggest expense when they’re in their 70s,” according to a study commissioned by a financial group to whom I will not give a shred of publicity.
Surprising, yes? Except the only folks surveyed for this study were 70-somethings with a net worth in excess of $1 million.
The median net worth for a household headed by someone in his or her 70s was actually just a hair over $203,000 in 2007, according to the latest Federal Reserve Survey of Consumer Finances. “Median” means half of the households had less wealth. Only 13% of this age group had a net worth over $1 million back then. There are probably even fewer today, what with the housing meltdown and stock market crash.
Median income for this age group, meanwhile, was $30,645. It’s hard to imagine taxes being a major concern to the 50% of 70-somethings making less than $2,600 a month.
In fact, the Consumer Expenditure Survey indicates the average tax burden for those aged 65 to 74 is $1,374 a year, an amount that drops to $865 for those 75 and over.
By contrast, here are average health care expenses for older people from the 2004 National Health Expenditure Survey (the latest year available):
- Seniors age 65 and over spent an average of $4,888 per capita annually out of pocket for deductibles, copayments, premiums and other health care expenses not covered by insurance.
- Their spending is more than twice as high as the average nonelderly adult.
- The largest expenditures occurred among those 85 and older, who spent an average of $8,304, compared to $5,066 for seniors ages 75 to 84, and $3,851 for those 65 to 74.
Why did this release irritate me so? Because it pretended that a minor irritation of a privileged few was a bigger deal than a real, and growing, crisis for many older families.
Taxes are what a friend of mine would call a “quality” problem. You don’t pay them, typically, unless you’re making money.
Health care costs are simply a problem, and a big one for many older Americans.
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