Other people, and initially readers, think that Squeaky is older than Raymond because Squeaky tells readers in the first paragraph that her main job is to look after her brother Raymond:
I don’t have much work to do around the house like some girls. My mother does that. And I...
don’t have to earn my pocket money by hustling; George runs errands for the big boys and sells Christmas cards. And anything else that’s got to get done, my father does. All I have to do in life is mind my brother Raymond, which is enough.
People automatically assume that the older sibling watches out for the younger sibling. Another contributing factor to people thinking that Squeaky is the older sibling is the fact that Squeaky occasionally just tells people that Raymond is her little brother:
Sometimes I slip and say my little brother Raymond.
She has probably gotten into the habit of doing that because it is easier to falsely affirm someone's beliefs about Raymond rather than taking the time to explain their error and Raymond's situation. Readers do not know what is wrong with Raymond. Squeaky never gives readers a diagnosis. She gives readers a few signs and symptoms that Raymond has. We are told that he has an unusually large head and that he is "not quite right." Raymonad has some sort of mental disability. The enlarged head is called macrocephaly, and it can be caused by multiple genetic disorders such as Alexander's disease, Canavan disease, or hydrocephalus.
Regardless of what caused Raymond's condition, the end result is the same. Squeaky must take care of him because he cannot take care of himself. In a way, Squeaky really is the older sibling. Raymond's mental development is happening at a much slower rate than Squeaky's. While Squeaky might be physically younger than Raymond, her brain is already beyond his mental development. Due to this fact, Squeaky appears and acts older than Raymond.