Baby boomers will be assets, not liabilities
- Article by: CHRIS FARRELL
- December 17, 2011 - 3:13 PM
The list of ills weighing on the U.S. economy is long, from high unemployment to stingy wage gains to widening income inequality. So, during the festive holiday season I want to focus on some good news: Americans are living longer. Average life expectancy is a fraction above 78 years and climbing. Back in 1935, when Social Security became law, average life expectancy was 61 years. It's a remarkable achievement.
Problem is, the good news about living longer is typically greeted with dire mutterings about an age apocalypse or the gray tsunami. The Woodstock generation, the roughly 76 million baby boomers born from 1946 to 1964, is getting older and living longer. The fear is that living standards will plunge as spendthrift boomers live to a ripe old age. Social Security payments won't be there to help out as the system buckles from too few workers supporting too many retirees. The swelling ranks of the elderly will send medical costs spiraling out of control. The mantra "we can't afford to grow old" echoes from congressional hearing rooms to corporate boardrooms.
Yet there are strong reasons to believe that the age apocalypse won't arrive as advertised. Like your grandfather's Oldsmobile, the image of an America debilitated by age belongs to a different economy and an earlier generation. Instead, a series of broad, mutually reinforcing changes in the U.S. economy -- from the spread of information technologies to the decline in disabilities -- will make an aging population much more of an economic asset than before. Boomers won't drag the economy down as they age. They'll be an economic asset.
Of course, many people who want to work right now can't find a job. Not all seniors will be physically and financially healthy.
Nevertheless, the lesson of two bear markets and two recessions in less than a decade is that most of us will have to earn some money well into the traditional retirement years. The economy will eventually gain traction and the unemployment rate will come down. Many older workers will decide to go into business for themselves. For instance, 55- to 64-year-olds had the highest rate of entrepreneurship of any age group from 1996 and 2010, according to the Kaufmann Foundation. Earning a paycheck -- even a slim part-time one -- allows us to defer tapping into our retirement savings. A paycheck makes it possible to delay filing for Social Security benefits, a savvy financial move since the benefit goes up for every year you wait after age 62 and until age 70.
The bottom line: It's time to change the conversation about aging boomers from the decline and fall of the economy to a focus on boomer productivity and creativity.
"The narrowing of time left to live changes people's values and priorities," said Marc Freedman, head of Civic Ventures, a San Francisco-based nonprofit focused on the aging population. "Now there's enough time because of increased life expectancy to do something about it."
The leading edge of the baby boom generation has reached the traditional age of retirement of 65. The youngest boomers will cross that milestone in 18 years. Question is, will we continue to wring our hands about an aging America or embrace older workers as a valuable economic asset. The choice is ours.
Happy holidays and a wonderful New Year.
Chris Farrell is economics editor for "Marketplace Money." Send questions to firstname.lastname@example.org.
© 2014 Star Tribune