America’s Seniors Find Middle-Class ‘Sweet Spot’

Dionne Searcey and Robert Gebeloff

WAXAHACHIE, Tex. — Most Americans suffered serious losses during and after the recession, knocked off balance by layoffs, stagnant pay and the collapse of home values. But apart from the superrich, one group's fortunes appear to have held remarkably steady: seniors.

Supported by income from Social Security, pensions and investments, as well as an increasing number of paychecks from delaying retirement, older people not only weathered the economic downturn that began in 2007 but made significant gains, a New York Times analysis of government data has found.

As a result, America's middle class is graying.

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People on the leading edge of the baby boom and those born during World War II — the 25 million Americans now between the ages of 65 and 74 — have emerged as particularly well positioned in the nation's economic timeline. While there are plenty of individual exceptions, as a group they are better off financially than past generations and may well enjoy a more successful old age than future ones, even those merely a decade younger.

"These are people who have been blessed with good economic circumstances, especially those who were able to ride the wave of postwar economic growth," said Gary V. Engelhardt, an economist at Syracuse. "They're definitely in a sweet spot."

Older Americans' ability to rise during the postrecession years when most households were falling reflects a broader trend that has unfolded in recent decades.

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In the past, the elderly were usually poorer than other age groups. Now, they are the last generation to widely enjoy a traditional pension, and are prime beneficiaries of a government safety net targeted at older Americans. They also have profited from the long rise in real estate prices that preceded the recession. As a result, more seniors now fall into the middle class — defined in this case between the 40th and 80th income percentile — than ever before.

Median income for people 75 years and older has also risen, but not as much as it has for people in the 65-to-74 age group.

Daniel Rodrigueq | E+ | Getty Images

One of this relatively fortunate group is Monette Berryhill, 72. Six days a week she descends from her second-floor apartment for a treadmill workout in the poolside fitness room of her gated complex here in Waxahachie, south of Dallas.

A widow who says she enjoys her freedom too much to date, Ms. Berryhill dines out with friends from time to time and recently took in a country music concert. Her yearly vacation is a San Diego trip to see grandchildren, but this year she expects to splurge on an Alaskan cruise.

Ms. Berryhill's past career in customer service at two banks did not make her rich. But her retirement is comfortable.

"I feel like I'm doing all right," said Ms. Berryhill, whose red-framed glasses offset her snowy, spiked hair. "I really enjoy it."

Gains Mask Inequality

Some researchers have found that the economic success of seniors is masking an even deeper gulf in income inequality between the upper tier and everyone else than what is evident in the overall statistics.

"It's not so much that older people are experiencing unseemly gains in income," said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. "It's more that middle-aged people are not seeing income growing or even keeping pace with inflation."

Nearly half of seniors ages 65 and up consider themselves in excellent or good shape financially, according to a Pew survey last month, in contrast to younger baby boomers, who view their circumstances less favorably.

More secure in their finances, many older Americans have congregated in traditional retirement communities. The Villages — a Central Florida haven for seniors with its low crime and dozens of golf courses — has been the fastest-growing American metropolitan area for the last two years. Millions of other elderly people have settled in middle-income suburban and exurban areas like Waxahachie.

Living in the muggy weather and neighborhoods of classic gingerbread houses, most seniors here are thriving, riding an overall population boom. But the current crop reflects some different choices from those who lived in the area three decades ago. For one thing, many more of them are working to supplement their income.

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"The whole meaning of retirement is changing," said Gary Koenig, vice president for economic and consumer security at the AARP Public Policy Institute. "People are living longer; they have to fund more years of retirement."

Charles Kozlovsky, 73, retired from his job driving an 18-wheeler in 2009. Two years later he went to work as a school bus driver. The job keeps him busy but the work can be stressful; on a recent day a student was suspended from his bus for bad behavior.

In between routes, Mr. Kozlovsky goes to the senior center, a popular hangout for its 1,350 members that offers everything from poker games to Zumba for anyone 50 and up. For holidays, he and his wife play host to grandchildren who live nearby, setting up tables in the garage and back porch to squeeze everyone in.

The couple tend their backyard lemon and peach trees; sometimes they take trips to Branson, Mo., to see musical shows. Mr. Kozlovsky particularly enjoys his meticulously restored, shiny red 1957 Chevy, which he shows off in the parade at the annual National Polka Festival in nearby Ennis.

Most Baby Boomers think retirement unrealistic
Most Baby Boomers think retirement unrealistic

"Things got a little bit better when I started driving a school bus," Mr. Kozlovsky said.

As recently as the late 1990s, only one in five Americans in their late 60s had a job. Now, that number has jumped to almost one in three. And unlike in their parents' generation, more women are earning paychecks than in the past, contributing to household income.

Researchers say these factors are in large part responsible for the substantial rise in median household income that seniors in their late 60s and early 70s have experienced since 1989, even as Americans in their prime working years have mostly treaded water or lost ground.

Not everyone, of course, can work later in life. Health problems and age discrimination present major hurdles. And many of those who find jobs consider them barely adequate.

Pat Cherry, 72, has been earning minimum wage at a job in the library of the city-run Waxahachie Senior Activity Center. Ms. Cherry, who is divorced, had to retire early from a bookkeeping job after an autoimmune disease caused her to miss too much work. She could barely pay her bills until she found the part-time job through a government-sponsored work program, but it expired last month.

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Ms. Cherry is worried no one will hire her again. "I need the money desperately," she said.

Still, for those seniors who manage to work longer, the benefits can be significant, providing a much-needed enhancement to retirement income. And for those with enough money from a job to postpone receiving their monthly checks from the government, the value of future Social Security payments rises by about 8 percent for each year of waiting, up to age 70.

Social Security benefits make up more than half the total income for a majority of the nation's elderly — 52 percent of married people and 74 percent of unmarried people, according to the federal government.

Kathleen McGarry, an economist at the University of California, Los Angeles whose research focuses on the well-being of seniors, calls Social Security "the single most important tool in combating poverty among the elderly."

For Jim Engel, 72, his government benefit offered a lifeline after he lost his bakery business during the recession. The checks let him put off the sale of his nest egg, a Tennessee walking horse barn, allowing time for property values to recover.

"I feel blessed," he said.

Extra Responsibilities

To be sure, many older people have trouble making ends meet and some are saddled with responsibilities that exceed the reaches of the safety net. Mary Walker, 74, who fled New Orleans during Hurricane Katrina with no more than an extra pair of underwear in her purse, is now raising two young great-grandchildren on her own not far from Waxahachie. "At this age I shouldn't be struggling," she said.

But older Americans in general are significantly wealthier compared to previous generations.

The median assets of people ages 65 to 74 doubled between 1989 and 2013, a far greater gain than other age groups experienced. And while there has been a decline from the peak since 2007, largely because of the real estate bust, this age group lost less than others.

Ms. Berryhill, the widow in the gated complex, had no debt on her home on three acres when real estate prices were plummeting. By the time she put her house on the market in 2011, it sold in one week, at a significant profit. Besides that cushion, she gets about $1,600 a month in Social Security and has proceeds from retirement accounts.

She pays nearly $900 a month for a spacious, one-bedroom apartment decorated in red — the sofas, the computer mouse, the plates and even the napkins carefully folded into wine glasses are all red. On a recent day she bought an inflatable palm tree for her granddaughter's luau-themed birthday party.

Government data on consumer spending reflects the new reality. Adjusted for inflation, older Americans spent 18 percent more per household in 2013 than in the late 1980s, while spending for other age groups remained relatively flat. Higher health care costs, which fall more heavily on the elderly, accounted for a portion of the difference, but seniors spent 57 percent more on entertainment, and significantly more on a wide range of items, including homes, rental cars and alcoholic beverages.

Ms. Berryhill was 66 when she retired. Her husband, Warren Berryhill, died of heart problems seven years ago. At age 68, he was still working full time as a debt collector.

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"We thought it would give us more money to retire on when we did retire," Ms. Berryhill said.

Ms. Berryhill is much better off than her parents, who grew up during the Depression. Her father, who was a gasoline truck driver, had to retire at age 61 because of a heart ailment. Her mother did not work outside the home. They were always able to pay their bills, but Ms. Berryhill said they never took a vacation trip, let alone left Texas.

"We weren't rich but we didn't hurt for being hungry or anything like that," Ms. Berryhill said.

She worries how her two children will fare. Their paychecks are bigger, but Social Security payouts, she fears, could be smaller when her children reach retirement age. They might have to take out loans to help pay for their children's college educations. They have 401(k) savings plans at work but those are not as generous as her employer-sponsored pension.

But she always taught her children to save, and she cannot do much more now, she says, than hope for the best.