Between October 2007 and November 2008 the Dow Jones lost more than 40%, and investors posted losses of more than $50 trillion globally. In a December 2008 report AARP said, “The economic downturn underway is likely to be the worst since World War II. Its impact on older Americans could be devastating.”
A March 2010 report from the Population Reference Bureau (PRB) referencing data collected by the American Life Panel (ALP), the Health and Retirement Study (HRS) and others said, “Mounting evidence indicates that the recession has erased decades of improvements in material well-being for the most vulnerable groups—children, the elderly, and the poor.”1 https://1a5ed0f87c04fd33de4e5317884e71e8.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html
Contrast those findings with this conclusion from a PRB report, published in November 2015: “The Great Recession (2007 to 2009) had wide-ranging economic effects on Americans of all ages, but older people were relatively insulated from the prolonged economic downturn.”2
This disparity invites an examination of what impact the crisis had on seniors and why.
Variances Within a Demographic
The AARP report made clear that within the senior population no one-size-fits-all financial reality exists. During the crisis, fewer older people were expected to lose their jobs, thanks in part to the fact that a small percentage of that population had jobs in the first place.3
For those who did find themselves unemployed, the consequences were expected to be serious. Those with defined-benefit plans were generally considered to be better off than those with defined-contribution plans, though there was a real fear that some defined-benefit plans would be frozen or fail.4
People who had to supplement Social Security with 401(k) or IRA monies were among those expected to be the most adversely affected. Some savers who had not moved out of equities into bonds had already seen large losses. Seniors not yet old enough for Medicare were at risk of losing their health insurance. People who owned their homes outright were expected to fare better than those who still had mortgages, especially those who saw their mortgages go underwater.5
The End of the Crisis
The 2010 PRB report showed that more than 70% of individuals age 40 and older felt the recession had affected them. Between November 2008 and January 2010 about 30% of those households said they had experienced being more than two months behind on their mortgage, negative home equity, foreclosure, or unemployment.
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