Senior Discounts: A Gift for the Rich

With my Charlie Card Senior Pass, I can still ride the T for 60 cents.  At the Kendall Square Cinema, I save $2.00 over the regular ticket price.  Amtrak gives me a 15% discount on most trains if I merely show my ID.  Wendy’s will take 10% off my tab for a quick burger and golden fries.  Best of all, the National Park Service issued me a “Golden Age Passport” for a token $10 fee that provides a lifetime free pass to all National Parks, forests, and recreational areas.

And here in Massachusetts I am particularly blessed for when I come to pay my Massachusetts state income tax, I don’t have to pay a cent on my Social Security earnings no matter how much other income I might have from wages, interest, dividends, and capital gains.

All of this comes to me for one simple reason.  I am more than 62 years old.

Back in 1959, such senior citizen discounts might not have been such a bad idea.  The poverty rate for those 65 and older was 35 percent, more than double the rate for those aged 18 to 64.  Today, however, the poverty rate for seniors has shrunk to less than 10 percent, only two-thirds the rate of younger adults.  According to the Pew Research Center, between 1967 and 2010, median inflation adjusted household income rose by 27 percent for those whose oldest member was 35 or younger and 48 percent for those age 35 to 44.  But for those 65 and older, income more than doubled (+109%).

That today’s seniors are doing so well relative to others is due to a number of factors. Increases in Social Security have raised many low income seniors out of poverty.   Older folks are staying in the labor force longer and continue to earn wages, some because they need the dough, but many others because they otherwise would be bored to death.  Baby boomers, now turning 65 at a rate of 10,000 a day, had the great fortune of buying homes when they were cheap.   As such, they not only had good incomes, but now have a tidy nest egg to boot.  Those in the older generation who went to college often graduated with little or no debt as tuition and room and board were much more reasonable a few decades back. Today two-thirds of graduating seniors in the country start off with college debt that averages more than $25,000.

All of this means that the gap in net worth between seniors and youngsters is growing exponentially.  According to the Pew Research Center, those aged 65 and older head households where the median net worth was nearly $171,000 in 2009.  Those younger than age 35 had net worth of less than $3,700.  And this wealth gap has increased dramatically since 1984 because the net assets of seniors has increased by 42 percent while the net worth of the younger generation has declined by 68 percent.  Even the meltdown in financial markets had little effect on seniors.  Those 65 and older saw their net worth decline by 6 percent between 2005 and 2009.  Those younger than 35 experienced a 55 percent loss in wealth; those 35-44 a 49 percent loss.

Simply put, those who are now senior citizens are part of the richest generation of Americans of all time and it is unlikely that younger generations will ever have the same incomes or the same wealth.

And yet we continue to shower our seniors with discounts while younger folks have to pay full fare.   This is a demographic twist on the growing tradition in the U.S. of the “rich get richer ….”

There’s nothing wrong with offering discounts or free passes or giving out some tax breaks. But we should be more careful about who gets them.  Some baby boomers can certainly use them because they have not benefited like others.  But I am much more concerned about those who are following our generation.  Somehow, they need the discounts more than we do.

It may be hard to means-test everyone before we offer them a free ride or a cheaper one, but every time one of us geezers takes advantage of a discount, try to remember how tough it is on the younger generations coming up the pike.

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