Tough Economic Times and the Effect on Older Adults

By Paula Fenza

An AARP-sponsored survey conducted during April of 2008 reported that most middle-aged and older persons are having difficulties paying for such necessities as food, gas, utilities, and medicine. Because the prices of consumer goods are rising, many have felt the need to postpone major purchases and travel plans. Bills

Overall the survey showed a deep sense of concern about the state of the economy—81% of participants surveyed said that the economy is in fairly bad or very bad condition. Although Baby Boomers feel a relatively greater impact in terms of compromised retirement savings and mortgage foreclosures, adults aged 65 and older are also finding it necessary to take drastic steps to cope with the slowing economy and increasing prices.

While a majority (58%) of older adults surveyed are not concerned about foreclosures on their own homes, they are concerned about the effect of foreclosures on the community as a whole, including the potential for crime in neighborhoods with large numbers of foreclosed properties (69%); the impact of foreclosures on their own properties values (55%; and the decline in stock values due to foreclosures (57%).

Although the absolute effect of rising prices seems to have a greater overall impact on those aged 65 and older due to relatively lower incomes, they’ve made fewer spending changes than Baby Boomers aged 45-64. Greater numbers of the 65 and older group own their homes without a mortgage compared to Baby Boomers; many more have company pensions; they already have insurance coverage through Medicare; and generally, they have higher savings levels and lower consumer debt levels than Baby Boomers.

Moreover, having experienced more economic downturns and recessions (including the Great Depression) than younger adults, older adults have had more experience with riding out economic downturns. Nevertheless, adults 65 years and older are feeling some direct impact from the worsening economic situation. Forty-four percent report that their 401(k)s or other investments have decreased in value. More than one-third report a decrease in the value of their homes. In addition, 66% are finding it more difficult to pay for essential items such as food, gas, and medicine; and 53% are having difficulty paying utility bills. Substantial numbers are also spending less on luxury items such as eating out (46%), entertainment (45%), travel (35%), and major purchases (30%). Furthermore, 34% are finding it necessary to assist adult children with bills or expenses.

AARP and the AARP Bulletin commissioned the survey, titled "The Economic Slowdown's Impact on Middle-Aged and Older Americans." The national telephone survey of 1,002 people aged 45 and older, was conducted April 12-23, 2008 by Woelfel Research Inc. Complete survey results can be found at: http://assets.aarp.org.

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