Older Adults and the 2007-2009 Recession
GAO-12-76, Oct 17, 2011
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The recession of 2007 to 2009 has been the most severe in this country since the 1930s. After adjusting for inflation, gross domestic product declined by 5.1 percent and the national unemployment rate peaked at 9.5 percent. While the recession officially ended in June 2009, our economy has experienced a weak recovery, with unemployment still above 9 percent. While the recession has affected all age groups, older adults--particularly those close to or in retirement--may face a greater burden because they may not have the same opportunities to recover from its effects. For example, older adults--generally those 55 and older--may have insufficient time to rebuild their depleted retirement savings due to sharp declines in financial markets and home equity, and they may experience increased medical costs. Also, as our previous work has shown, older workers are less likely to be unemployed than workers in younger age groups, but when older workers lose a job they are less likely to find other employment. These challenges have intensified older adults' concerns about having sufficient savings now and adequate income throughout retirement. Given your interest in the status of older adults and the effect of the recent recession, we examined the following: (1) What changes have occurred in the employment status of older adults, generally those 55 and older, with the recession? (2) How have the incomes and wealth of older adults in or near retirement changed with the recession? (3) What changes have occurred in the costs of medical care, the purchasing power of Social Security benefits, and mortality rates for older adults in recent years?
(1) Since 2007, unemployment rates doubled and remained higher than before the recession for workers aged 55 and older. While these rates were not as high as for other age groups, of more concern is that once older workers lose their jobs they are less likely to find other employment. In fact, the median duration of unemployment for older workers rose sharply from 2007 to 2010, more than tripling for workers 65 and older and increasing to 31 weeks from 11 weeks for workers aged 55 to 64. In addition, the proportion of older part-time workers who indicated they would prefer full-time work nearly doubled during this time. Unemployment rates increased for all groups during the recession and remained lowest for whites. (2) Household income fell by 6 percent for adults aged 55 to 64, but increased by 5 percent for adults 65 and older. Median household net worth fell during the recession for older adults. Poverty rates increased for adults aged 55 to 64, but declined for those 65 and older, while low incomes were more prevalent in older age groups than in younger ones. In addition, poverty rates were higher than the rates based on official levels when medical costs were factored in. The percentage of adults who began drawing Social Security benefits at age 62 rose during the recession, as did awards of Social Security Disability Benefits and applications for Supplemental Security Income benefits. Food insecurity also rose among older adults during the recession. (3) Medical costs continued to rise faster than other costs, and older adults continued to spend more on medical care than those in younger age groups. The purchasing power of Social Security benefits was maintained with cost-of-living adjustments and, for those receiving benefits in 2009, was increased with a one-time $250 Recovery Act payment in 2009. Mortality rates for older adults continued a long-term decline during 2007 through 2009.