JUDY WOODRUFF: The start of the new year marks another milestone for the baby boom generation. The first of the estimated 79 million Americans born between 1946 and 1964 will turn 65 years old this year, at a rate of 10,000 a day, according to the Pew Research Center.
And there are big implications for everyone. The number of people enrolled in Medicare will grow from 47 million in 2010 to roughly 80 million when the last of the baby boomers turns 65 in about two decades, while enrollment in Social Security is expected to rise from 44 million to some 73 million. At the same time, the ratio of workers paying taxes to support the programs to beneficiaries will drop.
Well, here to explore some of the issues raised by all of this are Nicholas Eberstadt. He’s an economist and demographer at the American Enterprise Institute. And Ted Fishman, he’s author of the book “Shock of Gray,” which looks at the impact of the world’s aging population.
Gentlemen, thank you both for being with us.
Ted Fishman, to you first. People have been turning 65 for a long time. What makes the turning for the baby boomers a moment of special significance?
TED FISHMAN, Author, “Shock of Gray”: Well, it’s the size of the baby boomer cohort.
You know, they’re a big number. Our baby boom lasted a long time. It doesn’t make us the oldest country because we have the biggest baby boomer population. In fact, in some ways, we’re younger because our baby boom population is big. Japan had a very short baby boom, only around four years long. And they’re the oldest country in the world.
So, we have this big, diverse baby boom coming along into the post-retirement years, and they’re almost separated by an entire generation. You know, one of the interesting things about the baby boomers as they move into retirement is, you’re going to have baby boomers taking care of older baby boomers. It’s a very, very big group. And it’s going to be a very diverse group.
JUDY WOODRUFF: Nick Eberstadt, put this in some context. What does this mean for the work force overall?
NICHOLAS EBERSTADT, Economist and Demographer, American Enterprise Institute: Well, the United States is older than it’s ever been before. But we’re going to see a fundamental, dramatic push towards further aging over the next 20 years.
Now, think of it like this. Over the next 20 years, the U.S. population may grow by about 60 million, a little over 60 million. Half of that growth will be people over the age of 65. We’re going to have a population explosion, but it’s going to be an explosion of senior citizens. And that’s going to mean that the ratio of potential workers to potential retirees is going to change really fundamentally. Right now, it’s about 5-1. Twenty years from now, it will be around 3-1.
JUDY WOODRUFF: So, Ted Fishman, how well-prepared is the rest of society to care for all these boomers getting older?
TED FISHMAN: Yes, we’re not prepared right now. We’re in a bit of a panic.
I’m going around the country talking about my book, and people are so desperately afraid they’re going to outlive their money. But that means they’re adjusting around it. So people are preparing to work a little bit longer. You can get enormous relief from some of these fiscal challenges if people just work a few years longer.
Business is adjusting very, very dramatically looking for younger workplaces around the world. The aging of our country is really propelling our globalization strategies too, and urbanizing countries abroad, putting them in the same aging dynamic that we have been in. And, as Nick said, there’s aging ahead, but our aging is really causing aging everywhere in the world.
JUDY WOODRUFF: So, working longer the solution for some people, how big of a solution is that?
NICHOLAS EBERSTADT: Working longer may be part of the answer. The generation that’s heading towards retirement now is better educated and healthier than any Americans before them. That’s maybe part of the answer.
We’re going to have to look at our unfunded liabilities in Social Security and, much more to the point, in Medicare, which is an enormous liability compared to Social Security. We’re also going to have to look at some changes in fundamental habits, like saving, preparing for retirement and the like.
JUDY WOODRUFF: Well, let’s talk about Social Security and Medicare, Ted Fishman. I mean, how big a mismatch is there, especially with Medicare, for this cohort?
TED FISHMAN: It’s a huge mismatch. If we keep going on the current trajectory, we will be spending all of our GDP on age-related expenses before the baby boomers kind of age out of the picture.
And, so, we do need changes. The good news is, is that, as Nick said, the economy has changed. We’re now more a service economy, so people can stay in the work force longer if they have invested in their own skills. They’re not toiling physically. And you don’t need a huge difference in the retirement age or when people retire in order to make an enormous difference in the affordability of these programs.
This is part of the discussion that’s happening all over the world. It’s just started. And I’m pretty confident that the solutions being discussed right now will turn into solutions that make it far more manageable than it is today.
JUDY WOODRUFF: So, Ted Fishman, you’re talking about Social Security as well in that answer?
TED FISHMAN: That’s right, all of the health-related, which is the big, huge expense in Social Security, which is more manageable, but, in the long term, also needs adjusting.
JUDY WOODRUFF: Nick Eberstadt, one of you mentioned savings. And, clearly, this is a generation that many of us have focused on putting money aside. How much of a cushion is that going to provide ultimately?
NICHOLAS EBERSTADT: Well, it does provide a cushion already. I mean, the generation that’s heading towards retirement has been saving, but the savings have been very uneven. The distribution of savings and assets is very uneven for the group that’s, say, in the 55-64 range right now.
JUDY WOODRUFF: Meaning some people have saved a lot and others…
NICHOLAS EBERSTADT: Some people have saved a lot, and some — and others haven’t.
JUDY WOODRUFF: Yes.
NICHOLAS EBERSTADT: Social Security program, one of its great successes historically has been to prevent or forestall poverty for older people. But, if one is living on Social Security alone, one has got pretty penurious days looking ahead.
JUDY WOODRUFF: Ted Fishman…
JUDY WOODRUFF: Go ahead, yes.
TED FISHMAN: Oh, the big danger is that people are being pushed out of their primary employment before they get to Social Security age. So, there’s the highest employment in history — unemployment in history for the 50-plus worker. They’re working for a long time.
So, when you save, you’re not just saving for your retirement. You’re saving for a contingency that happens before your official retirement, some sort of forced retirement. And that means that the money you save over your lifetime may also be well invested if you invest in yourself and your skills.
So, instead of becoming a low-value worker in your 50s, you can have invested in yourself and have high intellectual capital, high skills, so that there isn’t the pressure to push you out of the work force. And I think this is also an extra monetary pressure that the boomers will be facing as they move through the 50s into their 60s in order to stay employed.
NICHOLAS EBERSTADT: And Ted’s point there I think is really important. And it doesn’t just affect people in their 50s or early 60s.
And part of what is going to make the situation better for the United States in the future is if the United States is a richer, more productive society. With more wealth, you always have more options. And this means focusing not just upon people right before retirement age, but in young people, on their training, on their education, on their skills and productivity for the future.
JUDY WOODRUFF: So, to both of you, and to Ted Fishman first on this, what are the decisions that we’re looking for government to make and for individuals to make as we begin to try to grapple with this?
TED FISHMAN: Well, in order for the government to stay solvent, they need individuals to stay solvent longer. And in order for individuals to stay solvent longer, they need to work longer.
So, there ought to be some sort of tax-advantage investment program you can take in yourself. How do I improve my skills over time? We save for our children’s education. We save for our retirement. But if we’re not saving for the honing of ourselves as a worker in our 50s, 60s, early 70s, then we’re going to find ourselves in a jam. And that jam that we’re all in will be the jam that we share together, unless people really are capable and able later in life as workers.
JUDY WOODRUFF: A final note of advice?
NICHOLAS EBERSTADT: In addition, personal responsibility for one’s own health, preventive health care, and, on the government side, encouraging innovation in health sciences and in other areas that can increase our productivity and wealth to help us deal with all of these problems in the future.
JUDY WOODRUFF: We will tell the baby boomers to worry, but not to worry too much.
JUDY WOODRUFF: All right, Ted Fishman, we thank you.
Nick Eberstadt, thank you very much.
NICHOLAS EBERSTADT: Thank you so much.
TED FISHMAN: Thank you.