A few years ago, TD Bank changed its policies on senior account fees. It eliminated free banking for seniors and instead reduced it to a 25 percent discount. A bank spokesperson explained: "As with any business, we have to look at the evolving Boomer demographic. We have to think about our long-term needs, as well as our profitability as a business." Or more bluntly, their boomer customers had lots of money and it was crazy to give the bank's services away for free.
Senior discounts used to make a lot of sense; there used to be mandatory retirements at 65, followed by many years of fixed incomes. Many seniors were having trouble hanging on to their houses as taxes increased, so many municipalities froze taxes for seniors. Today, it's a very different story, with the vast increase in income inequality. You have many poor seniors on small pensions and social security who greatly benefit from senior discounts, and then you have a huge cohort of older people who are the richest generation that ever lived. According to AARP, American boomers drive $7.6 TRILLION in economic activity every year — that’s equivalent to the third largest economy in the world.
In other words, older baby boomers are pretty much like the whole country; lots of people who have lots of money and lots of people who don't. But the older baby boomers probably never had student loans to pay off and long ago paid off their mortgages — and maybe even sold their houses for 10 times what they paid for them. Generally, it's more likely that young people have far less disposable income than older people do and are in far more need of a discount. Yet it's the seniors who get discounts on transit, drugs and national parks.
A lopsided situation
Seniors get so many discounts. (Photo: throgers/Flickr)
The day I turned 65, I was thrilled to start getting a big discount on transit, paying two bucks instead of three for every ride. But then I see others who aren't my age counting out quarters, trying to pull together the fare to get on the streetcar and frankly, I feel a bit guilty. What have I done to deserve the discount they appear to need more?
Some might say I've done lots, paying taxes for all these years, paying into pension plans. But the kids are paying more and earning less, and they don't get social security or Medicare. And as Peter Taylor noted in Macleans, with people living longer (and some discounts kicking in at age 50) some people will end up getting discounts for almost half their lives.
It's a tough one. David Wallis says much the same thing in the Washington Post, suggesting that "It's time to retire the senior discount and redirect the savings to low-income people of all ages. The wealthiest seniors don't need the cheap seats at the movie house."
He suggests "income-based pricing" where "those seeking to take advantage of it could show any public assistance ID, disability claim or an unemployment pay stub to qualify."
But this is fraught with problems, as such programs become "entitlements" that tax-cutting governments inevitably try to kill. Universal programs directed to big voting blocs are much harder to gut.
Means testing, which has been considered in the United Kingdom, also "tends not to be efficient, fair or in the interests of the most disadvantaged." Peter Beresford, writing in The Guardian, explains:
When benefits are universal it means that there are better placed people concerned to fight for them.... When benefits are means tested, they lose these advocates and the most disadvantaged, with much weaker voices, don't have the political clout to ensure that they stay sufficiently resourced and constantly uprated. It's a vicious circle.
Universal programs have many advantages; they are cheaper to run and they do not stigmatize the recipient. But why do they mainly exist for seniors? I don't want to wade into the political discussion about Medicare for all or universal basic income, but it does seem odd that for people under 65, these benefits are considered evil socialism, but for people over 65, they are perfectly acceptable and simply the American Way.
There's nothing that magically changes when you turn 65, other than you get a whole bunch of universal benefits, privileges and terrific discounts. I do wonder what many of us have done to deserve them, and whether we really need them at all.