Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 5, 1993 TAG: 9307020367
SECTION: MONEY PAGE: A-8 EDITION: HOLIDAY
SOURCE: JUDY FOREMAN
DATELINE: LENGTH: Long
When it comes to what economists call "intergenerational transfers," or money passed back and forth in families, boomers and their kids are more likely to get money from aging parents than to give it to them, a spate of new studies shows.
Money, in other words, flows downhill, not up, in most American families. The reasons range from parental altruism, to the hope that dollars may buy filial devotion, to the often-greater financial needs of young and middle-aged families, to the lasting effects of the big social programs of the '60s and '70s that dramatically reduced poverty among older people.
In a sense, money has always trickled down through families, say those who study such things. But the current batch of older Americans is in a historically unusual position - their private pension benefits are better than those of most cohorts before (and probably after) them, and they often own homes whose value has escalated dramatically during the real estate boom of the 1980s.
"The 1980s have been an inordinately positive time for elderly people in terms of wealth," says Robert Harootyan, a demographer at the American Association of Retired Persons.
To be sure, many older Americans still do not have much to give. One in five people over 65 still lives at or near poverty levels, according to census figures.
But the advent of Medicare in 1965, plus initiation in 1972 of Social Security cost-of-living increases, "lifted millions of elderly people out of poverty," says Al Norman, executive director of Mass Home Care, an advocacy group for older people.
The relative economic security of today's older Americans, combined with the relative insecurity or even downward mobility among their offspring, he says, means the flow of "angel money" from parents to middle-aged children is a fact of life.
Just ask a 72-year-old Arlington, Mass., widow, for instance, a woman who still works full time as a secretary in Burlington, Mass., despite a "very bad back," to support herself and two sons, whom she describes as an unemployed 36-year-old who lives with her and a 40-year-old with a drinking problem who's on disability. Her daughters, she says, are doing fine.
"I'm fed up with it," she sighs, exhaustion in her voice, dreams of retirement - and subsidized housing for the elderly - permeating her thoughts. "I have fractures in my spine and wrist. I mind sitting at a computer all day. I'm not getting any younger. I've earned myself a retirement. But I just feel I have to help them. There is no one else to do it. They are my flesh and blood."
That kind of parental generosity, says Norman, is the rule, not the exception: "The greedy geezer myth says elderly people are draining resources from their children. The reality is many older people, until the day they die, pass resources down."
Considerable research documents that view.
Initial analysis of a telephone survey of 1,500 adults aged 18 to 90 conducted in 1990 by the American Association of Retired Persons shows, for instance, that 48 percent of Americans with adult children give large gifts to them, usually money. And the older people are, the less they expect such support in return.
By and large, Harootyan says, these gifts are such things as large appliances, audio-visual equipment or checks of about $5,000. Although it is legal to give gifts of up to $10,000 a year without incurring taxes, in most families, the gifts are not given for tax avoidance.
A survey of 3,000 adults conducted last year by Scott A. Bass, director of the Gerontology Institute at University of Massachusetts/Boston, and pollster Louis Harris showed that four times as many older parents said they contributed substantially toward their children's household incomes as vice versa.
Older folks, Bass adds, give adult offspring considerable physical help as well, nearly five hours a week on average in chores such as cooking dinner or household repairs.
At a recent meeting of the Population Association of America, economist Martha S. Hill of the University of Michigan confirmed these trends in both "money help" and "time help" among 7,000 families. Young adults aged 25 to 34, she found, were "net recipients" of time help from parents. People aged 45 to 64 were net givers of such help - to both aging parents and children. People over 75 were net receivers of time help.
But with money, the flow was almost always down, no matter how rich or poor the family.
Young adults aged 25 to 34, are net receivers of financial aid from parents, typically $500 a year, she found. People 45 to 64 still get money from their parents, about $100 a year. It is only when parents reach their 80s that "the flow stops, and there's not much giving either way," she says.
Is there any justice in this? "It depends on what you think of as fair," Hill says, adding money flow between generations is not reciprocal, but there may be long-term fairness in the sense that each generation gives to the next.
The bottom line is that "you can expect time help once you hit 75 or so, but you can really never expect money help from your kids," she says. "It's hard to say whether that is reluctance on the part of parents to accept money help or reluctance on the part of children to provide it."
by CNB