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Baby-boom generation a bigger financial threat than the recession

By Ward Harkavy in Featured, Health-care costs
Thursday, Apr. 2 2009 @ 7:52AM
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Let's assume that the current global recession will actually end. But even if it ends soon, it'll be the least of our worries in the long term.

The biggest threat? Baby boomers, who are surviving in record numbers thanks to health-care advances and whose retirement costs will drain economies even more than they're doing now.

Social Security was of course one of the life-saving measures that emerged from the Great Depression and it was heralded (left) by the Roosevelt Administration.

At this point in time, however, oldsters are hanging onto it for dear life.

And political pressure will continue to grow to curb it and other measures to help retirees.

The Financial Times points out, in "The Red Ink of a Greyer Future," that the economic crisis is making a bad situation for nations' economies worse.

What's surprising is the size of the impact of baby boomers' living long enough to retire:

To 2050, the cost of [the global financial meltdown] will be no more than 5 per cent of the financial impact [countries] face from the ageing of their citizenry. As the International Monetary Fund says, "in spite of the large fiscal costs of the crisis, the major threat to long-term fiscal solvency is still represented, at least in advanced countries, by unfavourable demographic trends".

The problem is the ratio of workers to retirees — the lower that is, the less money a nation's economy generates, and the less money to pay pension and health-care costs for the retirees. It's an arms race of a different sort:

It will take another 20 years of greying for Europe to become as elderly as Japan's population is today. The rest of east Asia is in a race to get rich before its people get too old to work. South Korea is currently well placed, with six citizens of working age for every pensioner. Yet thanks to a collapse in its birth rate, it will be one of the greyest countries on earth by 2050.

For societies, even if not always for individuals, it is possible to offset and mitigate many of the problems of ageing. Employment law is changing in order to keep people in work for longer.

Oh, that's just great news for now-elderly baby boomers.

And it's also not so great for young whippersnappers:

The latest explosion in public debt - difficult enough on its own - is exacerbating the impact of an ageing that was always going to be expensive. Together, they promise to make the next decade rather tough for taxpayers.

1 comment(s)
Ed says:

The generation that had it all : relative prosperity, relative freedom (in the 60s and 70s), stable jobs (compared to gen-x and gen-y), free education (in some countries).

They have chewed up enough of the world's resources and screwed later generations out of jobs and opportunities long enough. Yet they still think they are relevant!

They need to start dying. They need to just f. off and die. And let someone else have a go.

Posted On: Thursday, Apr. 2 2009 @ 6:13PM