Vigor of Elderly Is Key to Economy’s Well-Being

Retirement has long been viewed as a race you run from the day you begin working to the day you can finally stop. But the notion that the race is about getting to a “finish” line as fast as you can, and with a huge nest egg saved, doesn’t fit reality for many Americans today. This report focuses on different ways of thinking about the journey to retirement--and what life can be like after you get there.

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Retirement is about to become fashionable--and politically and economically important.

The early years of the new century will be like no previous age in history, with more Americans--40 million to 50 million--over the age of 65 and most destined to live into their 80s. The rest of the world too, including even China, will have populations growing older on average.

This new age of the aging will bring great changes. Elderly people will form an immense market for all kinds of goods and services. That fact is only beginning to be recognized by smart companies and by the emergence of Internet sites and services catering to the “third age”--as in youth, middle age, third age.

But there are other, more serious certainties that bear directly on current questions of federal expenditures and tax cuts. One is that with most Americans living into their 80s, if old-age health does not improve from today’s levels the economy will be faced with tremendous pressure, says Dr. Edward Schneider, head of the Andrus Gerontology Center at USC.

Schneider offers a simple scenario: If elder health improves, future 85-year-olds will have the vigor of today’s 70-year-olds, with modest needs for medical care and the ability to lead full and active lives. But if health does not improve from today’s levels, the economy will be burdened with special needs for nursing care, transportation, housing and medical arrangements.

Schneider poses the issue that way not merely to urge aging people to take care of themselves--exercise, eat wisely, avoid smoking, etc.--but because he wants to increase research on diseases of aging. Now less than 1% of the $1.14 trillion the U.S. spends each year on health care goes for research on Alzheimer’s, arthritis, Parkinson’s, prostate cancer and other diseases that debilitate older people.

Yet with more research, cures and alleviation of symptoms can be found for most or even all of those ailments. And finding cures for disease would have a huge positive effect on the economy, according to studies by the Milken Institute, the Santa Monica-based think tank that is becoming a leading backer of research on prostate cancer and other diseases.

An investment of $175 million in diabetes research now saves $7 billion in medical costs, the Milken Institute reckons. The economic value of reductions in heart disease in people aged 70 to 80 mounts to $15 trillion, the Milken Institute reports, citing work by the University of Chicago.

Such findings point to a need for new directions in federal expenditure for Medicare and other programs. Current White House aims are to shore up Medicare’s ailing finances, to prevent the program’s collapse in the next decade and to extend prescription benefits to Medicare recipients. Those are important aims, to be sure. But unless more diseases of aging are delayed or conquered, mounting bills for illness will swamp even the most robust Medicare program.

Also, current confusion over budget surpluses and tax cuts threatens to dissipate even existing reserves for Medicare, reports economist William Gale of Washington’s Brookings Institution.

So the current debate could have long-term consequences on the economy in the new age of retirement.

But while health will be critical, the relative wealth of the elderly will be extremely important also.

Even today, older people are less poor than ever--1 in 9 Americans 65 and older live below the poverty line today compared with 1 in 3 in the early 1960s, according to “Age Power,” a forthcoming book (Penguin Putnam) by Ken Dychtwald, a psychologist who runs Age Wave Inc., an Emeryville, Calif., market consulting company.

Today 70-year-olds spend more on average than 30-year-olds, Dychtwald reports. Older people hold more than 75% of all financial assets, own almost half the credit cards in the U.S. and buy 41% of the new cars, he says.

Behind such indicators lies the fact that the elderly have become more secure, thanks to Social Security and Medicare. A typical couple retiring in 1999 can expect to receive $500,000 in Social Security and Medicare benefits, according to economist Eugene Steuerle of Washington’s Urban Institute.

With that kind of protection assured, the new retirees live fuller economic lives, as some marketers have discovered. Thirdage.com, a new Web site offering community chats, travel bargains and advice to older people, lists as its sponsors Merrill Lynch, Millstone coffee, Drugstore.com, GE auto insurance, GreenTree--an online vitamin and nutritional service--and Sola Optical.

Del Webb, the home builder that originated Sun City communities more than 30 years ago, now has 15 Sun Cities with clients who demand computer hookups. Cidco, a supplier of telephone products, developed an e-mail device for grandparents to receive notes and pictures of the grandkids. Cidco became a hot stock, rising from $1.25 to $12 a share in the last year, before falling back to $9.69 as of Friday.

But beyond consumer products, the real change in this time is that retirement holds possibilities for personal growth, says Olga Gilroy, who with gerontologist husband Ed runs Gilroy Associates, a Los Angeles counseling service for the elderly. Retirees take courses in language, music and philosophy, Gilroy notes. “They often find new careers,” she says, pointing to a trend sure to grow in the coming decades.

The examples of two past pioneers offer useful insights for the future. Ethel Percy Andrus was a retired principal of Lincoln High School in Los Angeles in 1947 when, aggrieved at the lack of pension benefits, she founded the National Retired Teachers Assn. Later, in 1958, she founded the American Assn. of Retired Persons.

Andrus, for whom USC’s gerontology center is named, believed that older Americans could attain fulfillment by remaining physically and intellectually active and by serving others. And her vision guides most thinking on retirement today.

Another pioneer was Dr. Jonas Salk, developer of the first vaccine against polio. In the late 1940s, polio was epidemic and the outlook was for massive needs for iron lungs, wheelchairs and leg braces of the type that President Franklin D. Roosevelt, a polio victim, had worn.

But then came the vaccine, followed by Dr. Albert Sabin’s improved vaccine, and polio was conquered. The lesson, of course, is that the same can happen with Alzheimer’s and many other diseases of aging. Human beings may not live much longer than eight decades in the future, but they’ll live the final decades better than they now do. That’s the promise of the new age of retirement.

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James Flanigan can be reached by e-mail at jim.flanigan@latimes.com.