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Graying America Feels the Pinch
January 27, 2008 12:08 AM
by
findingDulcinea Staff
The nation's Social Security program is stretched as baby boomers hit retirement age. America is not alone in facing difficulties raised by an aging population.
30-Second Summary
An assisted living facility in the western New York town of Newark was once a middle school. Much of the town’s workforce is retiring—or will do so in the near future—leaving an aging population to rely on a dwindling force of medical caregivers.
Estimates project that by the year 2030, about one out of every five Americans will be 60 or older, compared to roughly one in eight now. The first baby boomer applied for Social Security benefits in October 2007. As that generation approaches retirement age, pundits are questioning the viability of the nation’s support networks for the elderly.
Washington Post columnist Dana Milbank believes that the wave of Social Security applicants that started last October may grow to consume the federal pension system. “As the boomers retire, Social Security will go into the red in 2017 and become insolvent 24 years later, according to the system’s trustees,” he writes.
Megan McArdle argues in The Atlantic that Social Security can survive the onslaught of baby boomers cashing in on their benefits. AARP, an organization that lobbies on behalf of senior citizens, and former Federal Reserve Chairman Alan Greenspan concur. In an article by media watchdog group FAIR, Greenspan is quoted as saying, “We’re approximately 2 percentage points of payroll short over the very long run. It’s a significant closing of the [Social Security] gap, but it's doable.”
Western Europe, whose population is lopsidedly older than America’s, also worries about the viability of its social security systems. “Instead of four workers to support every retiree, we’ll have only two,” writes Hans Ulrich Maerki, chairman of IBM Europe, Middle East and Africa.
Estimates project that by the year 2030, about one out of every five Americans will be 60 or older, compared to roughly one in eight now. The first baby boomer applied for Social Security benefits in October 2007. As that generation approaches retirement age, pundits are questioning the viability of the nation’s support networks for the elderly.
Washington Post columnist Dana Milbank believes that the wave of Social Security applicants that started last October may grow to consume the federal pension system. “As the boomers retire, Social Security will go into the red in 2017 and become insolvent 24 years later, according to the system’s trustees,” he writes.
Megan McArdle argues in The Atlantic that Social Security can survive the onslaught of baby boomers cashing in on their benefits. AARP, an organization that lobbies on behalf of senior citizens, and former Federal Reserve Chairman Alan Greenspan concur. In an article by media watchdog group FAIR, Greenspan is quoted as saying, “We’re approximately 2 percentage points of payroll short over the very long run. It’s a significant closing of the [Social Security] gap, but it's doable.”
Western Europe, whose population is lopsidedly older than America’s, also worries about the viability of its social security systems. “Instead of four workers to support every retiree, we’ll have only two,” writes Hans Ulrich Maerki, chairman of IBM Europe, Middle East and Africa.
Headline Link: ‘No Country for Young Men’
A visit to her family’s hometown of Newark, New York, led Megan McArdle to reflect in The Atlantic how the aging of the baby boomers will affect America. Largely devoid of children running in the streets—the local middle school was converted into an assisted-living facility—the town is emblematic of the country’s aging population as a whole. Projections show that by 2030, some 20 percent of Americans will be 60 years of age or older. McArdle writes that Social Security will likely remain largely intact, but Medicare may put the cinch on younger taxpayers.
Source: The Atlantic
Background: The aging world
Years of China’s “one child per couple” policy have led to heavily lopsided demographics. China has also experimented with wildly varying economic models over the past 60-odd years to the effect that seniors raised during the era of Mao don’t know how to cope. “Trained to create a communist utopia, they now find themselves in a post-industrial, knowledge-led economy, where cozy old neighborhoods are torn down to make way for huge shopping centers and office high-rises,” writes Jehangir S. Pocha for the Boston Globe.
Source: The Boston Globe
Hans Ulrich Maerki, the chairman of IBM Europe, Middle East and Africa, writes in a guest column for The Wall Street Journal that Europe’s social security systems are under more pressure than those of the United States. Europe has a smaller proportion of younger workers to baby boomers. “The proportion of people over 65 years of age will rise by more than 50 percent. Instead of four workers to support every retiree, we’ll have only two, with disastrous consequences for our pension systems,” Maerki writes.
Source: The Wall Street Journal (registration required)
Analysis: ‘Fear of a Gray Planet’
Brian Doherty wrote a direct response to Megan McArdle's article in The Atlantic. Doherty wondered how after writing that geriatric medicine is a prime career choice, that the baby boomers did not have enough kids, and that the country will need more immigrants to keep up a sufficient workforce, McArdle could end on "life will go on, and still be sweet" note.
Source: Reason
Opinion: Will graying baby boomers sink Social Security?
Skeptical about Social Security’s future
Dana Milbank, a columnist for The Washington Post, writes, “As the boomers retire, Social Security will go into the red in 2017 and become insolvent 24 years later, according to the system’s trustees.” He quotes an exchange between Social Security Commissioner Michael Astrue and Rebecca Cooper, reporter for Washington D.C.-based TV station WJLA, who questions the steps the federal government has taken to preserve the nation’s public pension fund.
Source: The Washington Post
Optimistic
Social Security will survive if the government makes “minor financial adjustments,” says the AARP. The Social Security’s treasury will remain flush through 2017, owing to a trust fund subsidized by an early 1980s tax increase. The fund has so far earned some $900 billion in interest, from which the rest of the federal government borrows $150 billion a year. In 2040, Social Security coffers are due to run out. Annual revenue from taxes would meet 74% of the subsequent shortfall. Raising the ceiling of income subject to Social Security contributions is one possible way to keep Social Security in the black.
Source: AARP
Fairness and Accuracy In Reporting, a self-termed “national media watch group,” disagrees with Dana Milbank’s stance, and says that Social Security will remain in the black. In an Oct. 19 article, former Federal Reserve Chairman Alan Greenspan is quoted as saying, “We’re approximately 2 percentage points of payroll short over the very long run. It’s a significant closing of the [Social Security] gap, but it's doable.” The article also quotes New York Times columnist Paul Krugman, who says, “It’s not at all hard to come up with fiscal packages that would secure the retirement program for generations to come.”
Source: FAIR
Reference Material: Getting on higher financial ground
Robert Brokamp, author of several how-to guides on investing, offers readers a five-pronged plan on preparing for retirement. He warns that as of 2004, the average annual Social Security payout was $11,000—not enough to get by in the United States. “You will live longer [than your parents], and you’ll have a more active (read: expensive) lifestyle. Your parents may have survived on 70 percent of their pre-retirement income. But that’s probably not enough for you,” he writes.
Source: The Motley Fool
The AARP’s Web site includes information on retirement planning, a guide to health care for aging adults and family issues, such as grandparents going back to work.
Source: AARP
© 2009 Dulcinea Media, Inc.
