[/caption]Carol Forsloff - In January 2011 the oldest of the baby boomers turned 65, with the first “shot over the cannon’ signaling a major shift in population that impacts the entire world, while the US government labors over the budget crisis.
Early this year Richard Johnson of the Urban Institute answered five questions about aging and its impact on the future of the United States and the rest of the world. He tells us at the outset that the problems of the growing numbers of elderly persons is a global problem.
13 percent of Americans are age 65 and over by January of 2011, with the percentage anticipated to be 16 percent by 2020 and by 2040 to 20 percent. In the meantime birth rates are falling.
This means fewer young people to economically support in some way a larger and continually growing older segment of society.
.By 2020, that share will jump to just over 16 percent. By 2040, it'll top 20 percent. The graying of the population is really a worldwide phenomenon as birth rates fall and longevity increases.
Those who follow the Ayn Rand philosophy maintain that as long as producers are allowed total freedom of production free of government restraints, then social upheavals will be prevented as people seek prosperity. Those who believe government should step in and take care of people who can’t take care of themselves represent another major philosophy, in opposition to the first. These two extremes remain the ongoing debate in the major countries of the world, with the labels for representative factions changing as the politicians shift with popular opinions during economic crises.
The first world impact of aging has to do with how choices have to be made among groups needing assistance vs. the needs of the greater culture as a whole. Infrastructure maintenance, education, energy and defense form a rival with what some refer to as entitlements. The problem with the word entitlements itself has to do with it means to their beneficiaries, some of whom see Medicare and Social Security as funds maintained by those beneficiary contributions. It was anticipated that when retirees reached age 65 there would be sufficient money to pay out those benefits. That was the case in theory when the institutions were created. The problem, however, is that by 2015 the system will be paying out more money than it takes in. Furthermore it is estimated that by 2040 as much as 9/10 of the Federal budget will consist of Social Security, Medicare and Medicaid payouts.
At the same time by 2030 it is estimated the elderly will pay ¼ of their incomes on health care costs.
Johnson believes we need to make it easier for older workers to be employed by taking away the taxes on incomes of people who continue to work after age 62 and the artificial ceiling for retirement at age 65 created by the culture. He believes the elderly have information and skills society needs, and that more members of that group should be employed. He calls for training for older people, along with raising the Social Security retirement age.
But while Congress continues to debate raising the Social Security retirement age, Johnson also recommends that people delay taking the benefits themselves in order to increase the payouts that will continue to grow with the additional months and years. He also observes that people should educate themselves about financial products and save for retirement.
The problems of long-term care and how to finance it are major obstacles for seniors all over the world, Johnson explains, although he has no real answers for the problem outside of additional savings along with research studies on patterns of saving of present pre-retirement groups.
In his discussion Johnson doesn’t examine the unpredictability of economic trends that impact senior incomes, just as government begins to decide on debt limits and entitlement adjustments.
In Portland, Oregon Christopher D. Werner offers financial direction and investment products through his company the Werner Group. He agrees, “We have to be defensive when we know some of our clients are seniors. What is recommended for older folks in the investment mix will be somewhat different, of course. On the other hand, I won’t advise someone at any age be involved in an investment vehicle I wouldn’t have for myself. You have to look at how investment managers have performed over time.
As for the future, yes we can’t predict it. We can only give our best answer based upon our knowledge of specifics now. Saving is fundamental to getting to a safe retirement, and cash isn’t the only option.”
Chris Werner, a 30+, energetic man looks at the cup half full, as his life in most ways is beginning, with a future in the financial world. His view continues to include the tried and true recommendations of balance, growth and saving.
It is, however, for Werner and for Johnson, as it is for seniors who did plan and save, the unknown face of the budget crisis aftermath that offers the greatest concern for elderly and for which there seem to be no good answers. And while working longer may seem the easy answer, seniors continue to be the most vulnerable group to layoffs and unemployment, making it difficult, if not impossible, for those younger baby boomers to plan at all.
