Silver tsunami
10/25/2007THE baby boom generation - the so-called demographic "pig in the python" - is approaching a milestone. The first boomers will turn 62 on Jan. 1 and become eligible for Social Security. But there are 71 million surviving boomers in the pipeline, and many could end up being shortchanged and the system bankrupted if Congress doesn't do something.
Federal legislators and economic experts are nervous indeed about the coming "silver tsunami" as the most numerous generation in history approaches that benefits milestone. If lawmakers don't act to fix Social Security, the fund could be paying out more than it collects in less than 10 years, and it could run completely dry by 2041.
More than a decade ago, when there seemed to be plenty of time to fix the system, economists and lawmakers began to debate what they needed to do to make Social Security solvent before the boomers started retiring. Now, January, 2008, is only weeks away.
Earlier this month, the oldest Baby Boomer, Kathleen Casey-Kirschling, filed to receive benefits. By retiring early, her monthly benefits will be 75 percent of what they would have been had she waited four years.
The former teacher from New Jersey will be 62 on Jan. 1, but she is only the vanguard of a demographic glut. Baby boomers - those born from 1946 to 1964 - will continue to swell Social Security rolls and will overtax the Medicare trust fund as well by 2019. The combined impact will add almost unimaginable financial strains to the nation's economy.
By 2030, the boomers will have pushed the number of Social Security recipients from today's 50 million to about 84 million. The number of those on Medicare will rise from 44 million to 79 million.
The real problem is that the generations following them are so much smaller and there won't be enough workers paying into the system to sustain so many beneficiaries. Demographers predict that in coming years, there will be fewer than two employees paying into the system for every retiree taking money out if it.
Incredibly, there is no law on the books compelling Washington to solve the problem. Former Federal Reserve Chairman Alan Greenspan made that point last spring when he deplored the absence of political will to solve looming problems in both safety net programs.
As for Social Security, Mr. Greenspan believes it would take mere tweaking - such as raising the age for full benefits - to make it solvent. But the longer the politicians wait to address the problem, the more drastic the solution will need to be.
Federal politicians must summon the courage to take quick, meaningful action. If Social Security ever became insolvent, the effects wouldn't just be bad for the elderly. It would affect the entire economy, and every American would suffer, sooner as well as later.