By Caitlin Kelly
Here we go again…
How Americans of the Baby Boom generations — born between 1946 and 1964 — have totally screwed everyone younger.
Below, I show a reasonable projection of the share of national income that will have to be spent paying for these obligations in the future if there is no substantial restructuring of liabilities. It’s based on consensus forecasts from groups such as the Congressional Budget Office and the Office of Management and Budget for economic growth and for programs such as Social Security and Medicare where such forecasts are available—but in some cases, such as state debts and pensions, no such forecast was available, and so I developed a simple one.
Making these payments will require fiscal austerity, through either higher taxes or lower alternative spending. Younger Americans will bear the burdens of the Baby Boomer generation, whether in smaller take-home pay or more potholes and worse schools.
Furthermore, the basic demographic balance sheet is getting worse all the time, increasing the relative burden on young people. Working-age Americans are dying off in alarming numbers.
As someone in this cohort, I have a real problem with this.
I would never argue that younger workers and voters don’t face tremendous headwinds, economically and politically. They do!
I look at the current cost of American university education and find it absurd that schools you have never heard of are demanding $40,000 to $60,000 a year to educate their students. Get real! Nor do many state schools offer a much less expensive alternative.
I paid all of $660 a year to attend University of Toronto — the annual fee for an equivalent course of study is now 10 times as much. But it’s $6,000, not $60,000.
That’s also a nation with different political and economic values, more interested in the common good (yes, higher tax rates) than individual wealth-building.
Blaming Boomers for every impediment to financial progress is so appealing. Intergenerational warfare is such a shiny little distraction from the heavy hand of capitalism, forever demanding “shareholder value” (i.e. return on institutional investments) instead of recognizing everyone’s need to save and invest and hope for a better financial future.
I know many many people in this cohort who are struggling mightily financially — hardly sitting on their thrones of gold, their private jet awaiting their flight to their fourth home. The truly wealthy are so rich it’s beyond comprehension at this point, leaving the rest of us to beat the hell out of one another.
Many people in their 50s and beyond who do not have a well-paid or secure full-time job, let alone one that offers a pension, are scared and desperate, facing:
— a possible next recession, having barely recovered from the 2007-2009 recession
— the costs of paying their children’s college
— having their adult children (and grandchildren) needing to return home for food and housing.
— the costs of paying their parents’ health care aides or nursing home
— the fear of those enormous costs for themselves
— facing widespread, rampant and illegal age discrimination, leaving them/us financially impotent to earn, save and invest for all of the above if we are shut out of decent, full-time employment with (in the U.S.) the subsidized health insurance everyone needs.
Half of Americans over the age of 48 have no money saved for retirement.
From Bloomberg Businessweek:
“Social Security provides most of the income for about half of households age 65 and older,” the GAO said.
The Employee Benefit Research Institute estimated earlier this month that 41 percent of U.S. households headed by someone age 35 to 64 are likely to run out of money in retirement. That’s down 1.7 percentage points since 2014.
EBRI found these Americans face a combined retirement deficit of $3.83 trillion.