From the April 2006 issue of Investment Advisor • Subscribe!

Older, but Healthier

The portion of the U.S. population age 65 and older is expected to double during the next 25 years, but this may be no reason for concern because today's older Americans are living longer, are better educated, and will be financially better off in their retirements than the previous generations, according to a recent government study.

The United States Census Bureau's 243 page report, "65+ in the United States," (available at www.investmentadvisor.com) was commissioned by the National Institute of Aging to survey the landscape of today's older generation of Americans. Among other things, the study found that the health of older Americans is improving, and their rate of disability is decreasing--perhaps reducing the financial burden of the government's healthcare programs in the future.

The financial situation of older Americans has also improved dramatically, the study says. According to the report, the proportion of people aged 65 and older who are living in poverty decreased from 35% in 1959 to 10% in 2003. However, the study found wide variations in income and wealth. In 2000, the poorest fifth of senior households had a net worth, including home equity, of $44,346. The wealthiest fifth had a net worth of $449,800.

"Already, for the most part, this generation of older Americans has a pretty good lifestyle," says Victoria Velkoff, chief of the Bureau's Aging Studies branch. "Hopefully, for retirement, the news will get out to the baby boomer generation that we really need to save for retirement, particularly when we switch from defined benefit programs to (defined) contribution programs."

The study also projects that education levels of retirees--which are linked to better health and a higher standard of living--will continue to increase among people 65 and older. By 2030, more than one-fourth of the older population is expected to have an undergraduate degree.--Ryan G. Murphy

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