&l;p&g;&l;img class=&q;dam-image shutterstock size-large wp-image-1019240875&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1019240875/960×0.jpg?fit=scale&q; data-height=&q;720&q; data-width=&q;960&q;&g; Shutterstock
Last week, &l;a href=&q;https://www.forbes.com/sites/ebauer/2018/03/23/retirement-savings-update-are-millennials-well-waiting-for-the-millennium/#1ed99fd52abd&q;&g;I wrote about Millennials &l;/a&g;and their (possibly) changing opinions on the federal government&s;s obligation to take care of everyone, and, in doing so, I referenced data from the General Social Survey, which is a &l;a href=&q;https://gssdataexplorer.norc.org/trends&q; target=&q;_blank&q;&g;really fun data set&l;/a&g; that&s;s accessible to the general public.&a;nbsp; In my looking through their survey data to see what the relevant questions were, I came across one item that I keep coming back to.
&l;a href=&q;https://gssdataexplorer.norc.org/trends/Current%20Affairs?measure=natsoc&q; target=&q;_blank&q;&g;The question asks&l;/a&g;&a;nbsp;whether&a;nbsp;the federal government is spending too much, too little, or about the right amount on Social Security, and the results are surprising.
I&s;m going to play the game of inserting a page break here, because I want readers to stop for a moment and think about what they expect the results to look like before clicking to the next page to see the graph.&a;nbsp; (Don&s;t worry, this isn&s;t an April Fool&s;s joke.)&l;!–nextpage–&g;
&l;img class=&q;size-full wp-image-183&q; src=&q;http://blogs-images.forbes.com/ebauer/files/2018/03/GSS.jpg?width=960&q; alt=&q;&q; data-height=&q;774&q; data-width=&q;938&q;&g; Percent responding we&s;re spending &q;too little&q; on Social Security, by age, screenshot
So there are two things which are surprising here:
First, for virtually the entire 30 years for which this question has been asked, retirees have been less likely to say that the government spends too little on Social Security, and more likely to say that government spending is &q;about right,&q; than other age groups.&a;nbsp; (Go ahead and click on the link above, then change the relevant drop-down to see this.)&a;nbsp; This goes against the usual expectation that one wants the government to spend more on&a;nbsp;that which provides direct personal benefits.&a;nbsp; Parents want more money for schools, city-dwellers want more money for mass transit, avid readers want more money for libraries, and so on.&a;nbsp; You might expect something like &l;a href=&q;https://gssdataexplorer.norc.org/trends/Current%20Affairs?measure=natrace&q; target=&q;_blank&q;&g;the chart on &q;spending to improve conditions for blacks&q;&l;/a&g; where there&s;s a 38 percentage point gap in the responses of blacks and whites.
But second, rather suddenly, starting in 2014, this trend reverses, and the proportion of those over 65 who believe that the government spends too little on Social Security rises sharply, and the number who believe it&s;s a &q;just right&q; spending falls, until this group lines up with everyone else.
What happened?&a;nbsp; Did retirees&a;nbsp;suddenly become much worse off, starting about this time?&a;nbsp; Not according to the data at hand, which says that household income of the over-65 set has been rising slowly but steadily, more than keeping pace with inflation.&a;nbsp; (There are some questions around the data — stick around for a postscript if you like.)&a;nbsp; This trend also doesn&s;t seem explicable by increased worries about the effect of stock market declines, since it kicks in well after the post-recession market recovery.
Here&s;s my&a;nbsp;guess:&a;nbsp; it&s;s the &l;em&g;ubi est mea&l;/em&g; theory.&a;nbsp; For non-Chicagoans who miss this reference, this was what &l;a href=&q;https://www.chicagoreader.com/chicago/the-radical-rokyo/Content?oid=899717&q; target=&q;_blank&q;&g;Mike Royko famously&l;/a&g; proposed as the city&s;s motto, instead of &l;em&g;Urbs in Horto;&a;nbsp;&l;/em&g;reflecting the city&s;s tradition of graft and machine politics:&a;nbsp;&l;em&g;&a;nbsp;where&s;s mine?&a;nbsp;&l;/em&g;
In 2013, the Obamacare exchanges opened for business.&a;nbsp; Might the over-65s&a;nbsp;have begun to feel that, &q;heck, if the government is now going to be spending more generously, I want some of that largesse&q;?&a;nbsp; Might retirees who had previously considered it perfectly natural that their finances would tighten upon leaving the workforce, have shifted their perspective, in reaction to an emerging feeling that Obamacare exemplifies a government duty to spend more?
It&s;s just a theory.&a;nbsp; But this shift is strange, at best, if not genuinely worrisome.&a;nbsp; (&l;a href=&q;https://janetheactuary.com/2018/04/01/forbes-post-ubi-est-mea-and-social-security-spending/&q; target=&q;_blank&q;&g;What do you think?&l;/a&g;)
Postscript:&a;nbsp; what do retiree incomes look like?&a;nbsp; Has the decline of defined benefit pensions started to take a toll?
Here&s;s a chart showing the &l;a href=&q;https://www.advisorperspectives.com/dshort/updates/2017/09/22/median-household-incomes-by-age-bracket-1967-2016&q; target=&q;_blank&q;&g;development in household income&l;/a&g; over the past 50 decades, from the website &l;a href=&q;https://www.advisorperspectives.com/&q; target=&q;_blank&q;&g;Advisor Perspectives&l;/a&g;&a;nbsp;but using income data from the &l;a href=&q;https://www.census.gov/topics/income-poverty/income/data/tables.html&q; target=&q;_blank&q;&g;Census Bureau&l;/a&g;.
&l;img class=&q;size-full wp-image-184&q; src=&q;http://blogs-images.forbes.com/ebauer/files/2018/03/retiree-income.jpg?width=960&q; alt=&q;&q; data-height=&q;669&q; data-width=&q;918&q;&g; Median Real Household Incomes by Age Bracket
This data shows that median household income is keeping pace with inflation, and even rising slightly, but it&s;s significantly lower than nearly all other age groups.&a;nbsp; However, this survey data is beginning to be recognized as problematic. Fellow Forbes contributor Andrew Biggs writes
&l;/p&g;&l;blockquote&g;The problem comes that the data source these figures come from &a;ndash; the Census Bureau&a;rsquo;s Current Population Survey &a;ndash; is very weak at measuring retirement income other than Social Security. In particular, the CPS undercounts the benefits retirees receive from both traditional pensions and retirement accounts such as IRAs and 401(k)s. If you undercount non-Social Security sources of income, retirees look both poorest and more dependent on Social Security than they really .&l;/blockquote&g;
Biggs links to a 2017&a;nbsp;paper by C. Adam Bee and Joshua W. Mitchell, &q;&l;a href=&q;https://www.census.gov/library/working-papers/2017/demo/SEHSD-WP2017-39.html&q; target=&q;_blank&q;&g;Do Older Americans Have More Income Than We Think?&l;/a&g;&q;which digs into additional data sources to identify more precisely the true amount of money available to retirees, something that will become increasingly important to evaluate as researchers monitor the impact of the shift from defined benefit to 401(k)-type retirement benefits.&a;nbsp; Interested readers can look at page 67 of &l;a href=&q;https://www.census.gov/library/working-papers/2017/demo/SEHSD-WP2017-39.html&q; target=&q;_blank&q;&g;the full paper&l;/a&g; for an easy visual presentation of the impact of their calculations.&a;nbsp; However, their data stops at the year 2013, so it&a;nbsp;doesn&s;t provide any information on the specific question of whether, however unlikely, significant numbers of retirees shifted in their opinion on the adequacy of Social Security spending starting in 2014 because they were somehow suddenly impacted by defined benefit pension freezes.&a;nbsp; In general, it&a;nbsp;appears to be&a;nbsp;very helpful data, but&a;nbsp;for this purpose&a;nbsp;we&s;re a bit in the situation of the man looking for his lost object by the streetlight, not because that&s;s where he thinks it is, but because &l;a href=&q;https://en.wikipedia.org/wiki/Streetlight_effect&q; target=&q;_blank&q;&g;that&s;s where the light is&l;/a&g;.