May 19 2012
It Simply Cannot Last
The recession decimated retirement savings, which led many to assume Boomers
would postpone retirement for a few extra years of income, savings, and
productivity. That assumption was wrong. In fact, the opposite appears to be true;
more Baby Boomers are retiring by the time they reach age 65, than were doing so
back in 2008. Not only was the assumption wrong, it was wrong in direction and
magnitude. The percentage of workers retiring by 65 skyrocketed in the past four
years from 19 to 45 percent. This means that more retirees are pulling benefits for a
longer period of time, albeit slightly lower benefits.
The expectation of retirement at 65 as an inalienable right will die with the Baby
Boomers— longevity for those who reach age 65 is increasing at a rate that cannot
be ignored. What is being ignored is the fact that Social Security’s impending
insolvency—spelled out in some detail in the most recent Social Security Trustees
Report –won’t take place until the Boomers are all safely guarded against
reasonable modifications benefits for the solvency of the program. Those benefits
will be paid for by the next generation or two while those workers will have to work
longer, pay more, and receive less in benefits no matter if the system experiences
substantive reform.
Stephen Marche draws the analogy of current entitlement policy to the Baby
Boomer generation cannibalizing their young. Beyond a fiscal responsibility issue,
entitlements are now an issue of generational injustice. Current generations have
been trying to claim a portion of the largesse of future economic growth for a while,
but the extent to which this is being done today threatens to diminish or even erase
future economic growth.