Our adult children are worried about us. Not necessarily about our health and well-being. It's more a generation vs generation thing and the fear that the aging population (that's us) might doom their economic future. That is, we'll drain the purses that support Medicare and Social Security and leave them working without a future safety net and in a disrupted economy. Here's why: Those of us who are currently working pay into a fund that pays benefits to those who are retired. Since we're living longer than our parents and their parents did, we're using up those funds faster than they can be replaced. The math is not in Gen Z's favor.
To sum it up with brief factoids:
The share of Americans age 65 or older is expected to grow faster over the next 30 years than the share of Americans between the ages of 25 and 54, the so-called “prime working age.”
The labor force participation rate is expected to dip over the coming decades.
With more people in need of care and fewer people working, economists see a potentially crushing burden on the U.S. economy and welfare system.
All is not doom and gloom. There are economists out there who see an alternative reality. A 538 story reports on three scenarios that tackle the labor part of the problem and one that takes a less gloomy look at the financial side.
Encore Careers: Jim Johnson, a professor at UNC's business school, sees us--America’s 70 million or so baby boomers --as an asset that could help build “the longevity economy,” which is what the economy will have to look like to accommodate an aging population. Here's how he puts it:
“Everything has to change in both the built environment and the social environment to accommodate an aging population. ... Given the labor market challenges that we're facing today, post-COVID, ‘encore careers’ [beginning a new vocation later in life] are something that we're going to have to pursue in a major way.”
Immigration Boost. Higher rates of immigration help countries experiencing population aging because immigrants tend to be younger and therefore more able to work than the domestic population. Many economic forecasters assume that by 2030, population growth from immigration will supersede that from natural increases (births minus deaths).
Recruiting Workers. Only two OECD countries spent less than the U.S. on programs to encourage labor market participation — like job training programs and employment subsidies — as a share of their GDP. Economists suggest that we (theU.S.) invest more in such programs to get more people working.
We Have Assets: We may not be the drain on the social security purse that everyone fears. As retirees, many of us have saved for our so-called Golden Years. What sets us apart from our European counterparts is the share of income we older residents draw from assets, rather than government transfers, in our old age. That means we may not be the burden Gen Z fears we will be.
painting: Heidi Malott