Senate Special Committee on Aging Worries about Baby Boomers’ “Golden Years”

Yesterday, while the Senate as a whole was waiting out Senator Cruz during his negotiated “filibuster” to move forward the continuing resolution to fund the government past September 30th, the Senate Special Committee on Aging took a little more than an hour and half during the afternoon to reexamine the increasing concern among Baby Boomers that they won’t be able to retire at age 65, or if they do, not at the standard of living that they’ve grown accustomed to during their productive years.

Baby Boomers find themselves nearing the Social Security full-benefit retirement age much less financially prepared than they hoped they’d be. The percentage of Boomers carrying debt ages 51 to 62 has risen six percentage points to 70 percent since the early 1990s, and the average debt has risen four-fold to $28,300 — all while the changing landscape in company provided retirement benefits has left many unexpectedly working into years they’d previously set aside for leisure.

There was surprisingly little mention of the dire situation that the Social Security Trust Fund currently finds itself in, or that since the 1950s the average American worker is actually retiring earlier- now 62 years old compared to 68 y/old. Not to mention life-expectancy has risen from 72 y/old to early 80s for workers retiring now–meaning Baby Boomers are expecting to spend approximately a third of their adult life in retirement. Although the remedies offered up for securing Baby Boomers’ golden years were nothing new– greater financial literacy, mandatory life insurance plans, auto-enrollment in company sponsored savings plans, and modifications to Social Security– the discomfort in addressing our own notions of what retirement should be was obvious.

“We’re coming to some tough conclusions here… Work longer is one conclusion. That certainly wasn’t the way it was in the previous generation,” said Chairman Bill Nelson, Senator from Florida.

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.