Life expectancy has greatly increased since the turn of the century. Increased longevity during the first half of the century was primarily achieved through the control of infectious diseases, which particularly affected children. During the last 50 years, gains in longevity have been made among the middle-age and elderly populations (1).

Table 1 shows the changes in life expectancies over the years and the differences between men and women. In 1900, the life expectancy at birth was 47 years; today, it is 75 years. Life expectancy for a 65-year-old person in 1900 was 12 additional years; today, it is 17 years. The life expectancies of 65-year-old men and women were similar in 1900, but today, women this age live almost 4 years longer than men. As a result, the ratio of male to female elders has declined sharply in the last 50 years as shown in figure 1, p. 20.

Proportion of Populations Who
Are Elderly Increased

Because people are living longer, the
proportion of the total population that is
65 years or older has increased from 6.8
percent in 1940 to 12.6 percent in 1990
(figure 2, p. 20). The group of people
85 years or older has increased most
rapidly. There are now over 3 million in
this group, 9 times as many as in 1940
(1).

More Elders Live Alone

Since 1965, the earliest year reported, the percentages of men and women living alone have both increased (figure 3, p. 21). The percentages living with others (relative or nonrelative, but not spouse) have decreased. This may reflect the increased economic independence of elders. They can afford to live alone so do not live with their children. Because women outlive men, most older men (74 percent) live with spouses, whereas only 40 percent of older women live with husbands. Fortytwo percent of women live alone, compared with 16 percent of men (16,22).

Economic Status

Poverty Has Decreased Because people are living longer, resources must stretch over longer periods. Thus, poverty rates might be expected to be higher than formerly. Yet, poverty has decreased among older Americans. Using the poverty measure developed in the 1960's, the poverty rate for people 65 years or older dropped from 29 percent in 1966 to 15 percent in 1974 and 12 percent in 1991 (figure 4, p. 21). This improvement in the economic status of older people during the 1960's and 1970's may be attributed to increased employer-sponsored pension benefits and Social Security benefits.

Source: U.S. Department of Commerce, Bureau of the Census, 1991, Statistical Abstract of the United States, 1991, [111th ed.] (22).

Figure 2. Percentage of population 65 years or older, 1940-90

14

12

10

8

6

4

2

For example, cost-of-living increases from 1968 to 1971 raised Social Security benefits by 43 percent (1).

Median Income Increased Median income (in 1990 dollars) of elderly families in 1945 was $10,565; in 1990, it was $25,049. Between 1965 and 1990, median income increased by 74 percent, compared with a 20-percent increase in median income of nonelderly families over the same period (figure 5, p. 22) (1,25-28). While the income of nonelderly families leveled off, the income of elders continued to increase because Social Security benefits were indexed to the Consumer Price Index beginning in 1972 (37).

Source: U.S. Department of Commerce, Bureau of the Census, 1991, Statistical Abstract of the United States, 1991, [111th ed.] (22).

Other Aspects of Improvement in Economic Status

The above discussion on income refers to a simple measure-before-tax income, adjusted by the Consumer Price Index. Patterns of after-tax income over the years could be different since tax rates changed from time to time.

Also, the adequacy of income is related to family size, and the family size of elderly households decreased over time. When income was adjusted for household size (income per person), the increase in income of elders was even greater. From 1967 to 1984, average real family income of the elderly grew by 42 percent. When adjusted for family size, the growth was 55 percent (8).

Nonmoney income sources, especially housing programs and Medicare, have increased the economic well-being of elders during the last few decades. One estimate suggests that the effect of adjustments for in-kind transfers, implicit income from housing, and lower tax rates increased the income of elderly by about 12 percent (8).

Also, assets are important indications of economic status. In 1950, 59 percent of older people reported owning their own home. In 1990, 76 percent were homeowners (31,36). Farm and business property and financial assets (stocks, bonds, savings accounts, etc.) have contributed to wealth in differing proportions. The value of elders' holdings of private pensions has increased as more elders are covered by pension plans. There has also been a steady increase in public funds, primarily Social Security and Medicare that may be considered assets for the elderly.

Trends in wealth over time are difficult to determine because researchers have used different definitions of assets and different sample designs and questions. Levy and Michel report on three studies

Figure 4. Poverty rates of elderly and nonelderly adults, 1966-91

Sources: Aging America: Trends and Projections, 1991 Edition, Prepared by the U.S. Senate
Special Committee on Aging, the American Association of Retired Persons, the Federal Council
on Aging, and the U.S. Administration on Aging (1); and U.S. Department of Commerce,
Bureau of the Census (24-28).

Sources: Aging America: Trends and Projections, 1991 Edition, Prepared by the U.S. Senate
Special Committee on Aging, the American Association of Retired Persons, the Federal Council
on Aging, and the U.S. Administration on Aging (1); and U.S. Department of Commerce,
Bureau of the Census (25,27).

that used, in general, the same components of gross wealth and debt (including home equity and other financial holdings and obligations, but excluding Social Security and defined-benefit pension wealth) (13). The earliest of the three studies was by Katona (11) who reported a change in net wealth of families headed by a person 65 years or older of 1-percent decrease for the period 1953-62. Greenwood and Wolff (4) reported a 24-percent increase for 1962-73, and a 1-percent decrease for 1973-83. Weicher and Wachter (39) calculated a 35-percent increase for 1977-83. Lewin and Sullivan observe that the largest increases in older Americans' wealth came from their financial assets, but home equity remains the principal form of wealth for the majority (14).

Expenditures

Expenditure Surveys

Income and assets are useful measures of economic well-being, but final consumption is usually of more interest (17). Consumption patterns have changed over the years. Expenditure surveys conducted by the Bureau of Labor Statistics that date back to the late 19th century (10) (and include surveys in 1901, 1917-19, 1935-36, 1950, 1960-61, 1972-73, and continuously since 1980) demonstrate these changes (9,12,31-36).

The 1935-36 Consumer Purchases Study was not a national survey. It was based on "families in small cities, villages,

and on farms in the Middle Atlantic and North Central regions of the United States." It excluded "foreign-born, Negroes, families on relief, and those with broken marital ties” (3). The 1950 survey (36) was the first national survey, but it was limited to urban families.

These findings suggest that the period 1977-83 differed from that of 1973-77 or that comparisons of net wealth over time are difficult.

Over the years, there were changes in the age categories used for elders. Some surveys reported expenditures for consumer units headed by a person 65 years or older; others reported separately for ages 65-74 and 75 or more years. To provide consistency, the mean expenditures of the two age categories (65-74; 75+ years) were weighted by population proportion, and the mean expenditures for units with heads 65 years or older were calculated.

*A consumer unit consists of either: (1) all members of a particular household who are related by blood, marriage, adoption, or other legal arrangements; (2) two or more people living together who pool their income to make joint expenditures; or (3) a person living alone or sharing a household with others, but who is financially independent.

Price Index. The budget shares for categories were calculated using current dollars.

Expenditure Trends

In 1990 dollars, mean total expenditures by urban elders increased from $14,649 in 1950 to $17,341 in 1990. The per capita increase was greater because the average family size in 1950 was two persons; in 1990, it was 1.7 persons (31,36).

Budget shares changed considerably from 1950 to 1990 (figure 7, p. 24). The percentage of expenditures allocated to food dropped sharply in the 1950's, from 30 percent in 1950 to 23 percent in 1960. Food share declined further

"Expenditure categories were defined differently from survey to survey before 1980. So that expenditures could be compared over the years, categories have been adjusted, whenever possible, to match 1980 data. For instance, the 1950 and 1960-61 surveys-unlike later surveys-reported gifts and personal insurance separately from total expenditures. Table 2 shows total expenditures for 1950 and 1960-61 that have gifts and personal insurance added in. Data for 1972-73 have been taken from published tables prepared by BLS using 1980 definitions (32).

to 19 percent in 1990. Apparel also declined. In 1950, clothing accounted for 8 percent of expenses, compared with 4 percent in 1990.

Increasing shares of the budget have been allocated to housing, transportation, and health expenditures. Housing expenditures consist of shelter, utilities, and other costs such as home furnishings and operations. Shelter (interest on mortgage, rent, property tax, and insurance) increased from 12 percent to 19 percent; utilities grew from 6 percent to 10 percent. Transportation expenses were 10 percent of the budget in 1950; by 1990, they had increased to 16 percent. The portion spent on health care doubled from 6 percent to 12 percent during the same period.

With the exception of health expenditures, these trends are similar to those of the nonelderly population during these years. (See Jacobs and Shipp (9,10,20) for expenditure patterns of the U.S. population.)