Does Insecurity About Retirement Scare Middle Aged Whites to Death?

There have been a few new twists to the story about rising death rates among middle aged whites, especially those with lower levels of education. As the Upshot group at the NYTimes noted today, a researcher at Columbia University, Andrew Gelman, looked at aged-adjusted rates within the 45-54 age group and concluded that at least some of the rise is due to fact that over time the 45-54 age group is more weighted to the older end of that age range, where death rates are, of course, higher. Anne Case and Angus Deaton then produced more numbers to illuminate the problem.

Based on his reading of the more detailed Case-Deaton numbers, Mr. Gelman wrote, “mortality rates among non-Hispanic whites aged 45-54 increased by an average of about 4% after controlling for age.” The increase was 12 percent without the age adjustment, suggesting that age bias accounted for about two-thirds of the increase — but did not entirely explain the increase. 

Ultimately, both sides of the exchange agree on a fundamental fact: The recent mortality trends for middle-aged whites look significantly worse than they do for many other groups. “Their key claim,” Mr. Gelman writes, “is that death rates among middle-aged non-Hispanic whites in the U.S. slightly increased, even while corresponding death rates in other countries declined by about 30%.”

One impact of this change in interpretation is that perhaps "smaller" issues can explain what's going on. One of the possible explanations is the rise in the use of prescription opioids for pain. However, this week's Economist notes that this phenomenon has not been peculiar to the US. Another issue raised by Case and Deaton in their article is the economic uncertainty over the past decade and half, and they point to retirement funding, in particular:

The United States has moved primarily to defined-contribution pension plans with associated stock market risk, whereas, in Europe, defined-benefit pensions are still the norm. Future financial insecurity may weigh more heavily on US workers, if they perceive stock market risk harder to manage than earnings risk, or if they have contributed inadequately to defined-contribution plans.

The key phrase here is "if they perceive." Another article in the Economist suggests that a large share of people approaching retirement in the United States are not financially prepared for retirement, although to be sure the change from defined benefit to defined contribution (DC) is a factor:

The problem is that many people simply do not save enough in a DC pension. The combined contributions of employers and employees average just 11.3% of salary. This will not generate the same level of pension as a typical defined-benefit plan. The CRR found that the average retirement assets of those aged 50-59 were just $110,000 in 2013, slightly lower than in 2010. This balance will improve over time, since DC plans are relatively new, but there is a long way to go. If pensioners take an (inflation-adjusted) 4% a year from their pot, they will need $250,000 just to generate an income of $10,000.

These numbers should scare all of us, not just those who aren't saving enough. We have an economy that is overly reliant on consumer spending and emphasizes going into debt to do that, rather than saving for the future. None of us will be better off if a lot of people start falling by the wayside in old age.