USA Today reports that at age 62, America's first baby boomer opted into Social Security today. The question for America is whether the 80 million people born between 1946 and 1964 will bankrupt Social Security by the time all of them are receiving their payments.
The caseload for so-called entitlements -- Social Security and Medicare -- is going to explode in the next 23 years. By 2030, Social Security's caseload will be 84 million people, up from 50 million today. Medicare will go from 44 million beneficiaries to 79 million. That will leave about two workers paying payroll taxes for every retiree. The tab is estimated at $50 trillion in future obligations over the next 75 years. Social Security will rise from 4% to 6% of the GDP, and Medicare will go from 3% to 11%.
The options are not good. Fixing Social Security solely with higher taxes or cuts in spending would mean a 16% increase in the payroll tax or a 13% cut in benefits. Medicare's needs would be far greater: a 122% payroll tax hike or a 51% reduction in spending, just for hospital care. Unfortunately, the longer we wait to fix the problem, the more it will cost.
However, if history is any guide, we'll wait until a crisis before we find the will to act. And that crisis will fall on the shoulders of the baby boomers' children and grandchildren -- not much of a legacy.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.











Reader Comments (Page 1 of 1)
10-15-2007 @ 3:39PM
scubapop01 said...
in one large nut shell how can you say that . you know the u.s.a. goverment is using that money to fund the wars, projects ,everything except what it is suppose to go for.you are just like the other partys that try and bull shit everyone . for once just tell it like it is or don't say or speak or tell lies
what are you running for ??? in what election are you trying to win ??? you speak just like one of them.
10-15-2007 @ 3:41PM
wally said...
Let retirees work without loss of benefits(no reductions). That way more people would be paying in to Social Security + retirees could get medical benefits while working, less drag on Medicare!!
10-15-2007 @ 3:52PM
John said...
Why don't we stop paying retirement for Congress Men/Women and Senators for serving 4 to 6 years!!! That's a start for paying the Boombers SS.!!!
10-15-2007 @ 4:02PM
Bill Pilker said...
It is time to look at all government spending and make adjustments to all programs to bring about a fair treatment to Social Security contributors.
10-15-2007 @ 4:04PM
Bill Pilker said...
It is time to make adjustment to all programs for the benefit of those who have contributed to Social Security. It is time for one national program for all workers-private and public as a basis. Big cuts must be made to defense and other programs and that money contributed to a Social Security Trust Fund that invests the money for beneficiaries.
10-15-2007 @ 5:42PM
Jeff said...
i say we bomb all retirement homes and most of florida. old people are a threat to the security of the United States.
10-15-2007 @ 5:12PM
Jack F. Doyle said...
We heard it 10O or more times, STARTING WITH ROTTON RON REAGAN " PUT A LOCKBOX ON SOCIAL SECURITY'but now tha a-- holes even put a trillion dollar budget off the books.
HOW IDIOTIC AND LARCENOUS CAN THE WHITE HOUSE GET?
10-15-2007 @ 5:18PM
Beverly said...
We put the MOST in so why shouldn't we get the MOST out?
10-15-2007 @ 7:00PM
cher3993 said...
I have worked since I was 13 years old. I had 20+ yrsin at one insurance company before all this "re-engineering" BS started many yrs ago. That company shut down our office only because we had the most long term employees of any office in the nation. Of course that meant also the highest pay base, but we also were the most knowledgable, hardest working, most loyal and least absenteeism. We took on the biggest and worst companies and got everything going smoothly then the claims responsibility would be transferred to another office. All I am really saying is that honest, loyal and hard working people mean nothing to companies anymore or to our government. I have paid all taxes since I was 13, I am now reaching retirement age and what will be there for me? Can I sue the government for all of the money they have stolen from my paycheck for the last 40yrs? What has the govt done with all of the money they have taken from me and every other taxpayer. That money should have been put into SS and Medicare and NEVER EVER used for anything else. It should be there with interest and there should be no worries about paying back the senior citizens for the trillions upon trillions of dollars they have paid in! Stop giving away our SS dollars to the thieves in the congress and senate. They do not deserve any more then the normal SS benefits that they have paid in which is none!
10-16-2007 @ 1:54AM
John said...
It was stupid to start a surplus. Idiotic. The system was brilliantly designed to be pay as you go.
It's simple to handle the baby boomers. People have gotten so damned dumb. You don't have to increase payroll taxes or decrease benefits. We've elected a bunch midget brains.
First, society cannot escape the cost of retiring the baby boomers. They are going to retire, the people of the United States of America are going to pay for it. Cutting benefits will get you out of paying not one thin dime. There is no moral way to get out of it.
Second, in life when you are faced with paying something that is extremely expensive, like a war or a house, you borrow the money. I don't see why retiring the baby boomers is going to be any different; in fact, unless you want to kill them off, it can't be different.
10-24-2007 @ 5:26PM
GoingLikeSixty said...
You are right about nothing being done until a crisis is at hand. We have no leaders that are willing to say "raise taxes or lower benefits."
Anyone under 50 who has SS as part of their retirement plan has not been paying attention.
Baby boomers (that's me) will SS and Medicare.
10-24-2007 @ 5:28PM
GoingLikeSixty said...
edit: will kill SS and medicare
10-27-2007 @ 8:03AM
Louis Seretta said...
You are all worried about the baby boomers but the ones you should be worried about are the politicians who are stealing us blind. they don't fall under social security they write tax rules to tax our benefits and they squander BILLIONS of dollars on the Iraq war. The tax code and greedy politicians are the real worry.thier attitude is I got mine Srew You.
12-28-2007 @ 6:06AM
Glenn said...
No one under 60 should go to war. Everyone 60 and over, everyone, should fight in the war, if there isnt a war, make one. That way, there would be no need for S.S., we would all be service members ready to die for the noble cause of protecting the U.S.A., I would prefer to go out in a blaze of glory, then depend on S.S., old folks home, medicare and all the other programs the government thinks we dont deserve. Here today, hero tomorrow. Combat right beside my elected leaders of today and comrade in arms tomorrow. You turn 60, you go to the armed services.