Public Policy Institute of California
California Counts

“Graying in the Golden State”
Demographic and Economic Trends of Older Californians

By Sonya M. Tafoya and Hans P. Johnson

California’s population is aging rapidly. By 2030, one of every three Californians will be over the age of 50, and the proportion of the population that will be over 65 will have almost doubled from 11 percent in 1998 to 17 percent. This tremendous increase in the older population of the state will be driven primarily by the large cohort of baby boomers who will be entering retirement ages over the next few decades. Lower mortality rates will also contribute to the aging of the state’s population.

Today’s older Californians are relatively well off. Poverty rates are substantially lower for older residents than for other age groups in the state, with only about one in ten living in poverty. The primary reason poverty rates for older Californians are so low is Social Security, which provides sufficient income to lift many older Californians above the poverty threshold. The majority of older Californians derive more than 70 percent of their income from Social Security.

However, tomorrow’s older Californians are less sanguine about the promise of Social Security. Only 35 percent of the baby boomers in California believe that the Social Security system will provide the benefits they should receive when they retire. Changes in the marital status and labor force participation of boomers compared to earlier generations also raise questions about the ability of the current system to provide future benefits. Surprisingly, despite their skepticism about Social Security, boomers do not appear to be saving at higher rates than past generations. Only about half of all jobs in California offer pension plans or retirement benefits, a figure that has changed little over the past 20 years and that is substantially lower than in the rest of the nation.

Although the aging of the nation’s population has led to widespread concern over the viability of Medicare and the Social Security system, less attention has been focused on the state’s ability to continue to provide services to a population that is increasing at both ends of the age spectrum. Already, for example, 24 percent of the state’s Medi-Cal1 payments and about one-third of the state’s Supplemental Security Income (SSI) payments are directed toward older Californians, a figure that is likely to rise as the state’s population ages. The primary demographic challenge for California in the early 21st century will be to find ways to satisfy the demands of an increasingly older population while maintaining the financial stability of the government and a desirable quality of life for all Californians.

For the full article “Graying in the Golden State” from the Public Policy Institute of California, please click here.