The Forgotten Middle: Americans Struggling Paycheck to Paycheck Living Fewer Years in Retirement

The projected health and financial outlook for Americans nearing retirement in the lower economic bracket hasn’t improved over the last two decades, a recent study reveals. However, the individuals most overlooked are not just the lowest 15 percent based on financial resources, but also what the researchers label as the country’s “the forgotten middle.”

This group, falling between the 15th and 45th percentiles, often misses out on support systems such as Medicaid, low-income housing, and food stamps due to their marginally higher resources. They also still struggle to cover rising expenses like health care and housing.

To map the trends, researchers from Columbia University Mailman School of Public Health and University of Southern California utilized data from the Health and Retirement Survey, combined with an intricate microsimulation model, to estimate life expectancy and potential disabilities for 60-year-olds spanning from 1994 to 2018. Four distinct economic groups were analyzed, namely upper, upper-middle, lower-middle, and lower.

The results showed a somewhat bleak pattern: while life expectancy at age 60 grew by 1.5 to 2 years for the more affluent groups, it remained the same or even decreased for those at the lower end. The years anticipated to be lived without disability mirrored these results, revealing a decline in all categories, especially for those less economically privileged.

“The relatively neglected “forgotten middle” group of near-retirees in the lower-middle group will require stronger supports than are currently available to them,” says Dr. John W. Rowe, the Julius B. Richmond Professor of Health Policy at Columbia University Mailman School of Public Health and the Butler Columbia Aging Center, in a university release. “This is not a tiny group, rather 30 percent of older persons. We need new strategies to avoid a wave of disability in late life.”

Pointing towards a possible solution, Dr. Rowe mentioned that health insurance coverage for the lower-middle group did see an upturn following the introduction of vital components of the Affordable Care Act in 2014. However, these gains couldn’t counteract the decline in employer-sponsored insurance.

“The lack of health insurance before reaching Medicare age could result in delayed control of emerging chronic conditions, which is important for promoting healthy aging,” notes Dr. Rowe.

Researchers also highlighted a concerning trend regarding homeownership. In 1994, the gap in homeownership rates between the lower-middle and upper-middle groups was 10 percent, but by 2018, this disparity had tripled. While the upper-middle group enjoyed a stable or increasing health insurance coverage rate, driven primarily by employer-sponsored schemes, the lower-middle group’s coverage took a nosedive.

“Increasing years lived with disability burdens our health care system, reduces productivity and strains family caregivers. This is a risky strategy for an aging society,” Rowe concludes.

The study is published in the journal Health Affairs.