US To Go Broke Funding Social Security for Baby Boomers
"Challenge for the USA, the retirement of the baby boomers."
La Nacion reports on another reason why it is probably late in the cycle for the United States: the country has obligations it cannot meet. The first baby boomer, a woman named Kathleen Casey - who was born on January 1, 1946 - will turn 62 in three months. If we read the article correctly, she'll be able to begin to collect Social Security. Behind her are 84 million others, almost every one of them counting on getting something from the government - either Social Security, Medicare or Medicaid.
"How about you, Bill?" asked a friend last night. "Are you going to go for partial payments at 62...or wait until 65 to get the whole enchilada?"
We had never thought about it. We always assumed that we would get nothing at all. And we still can't quite imagine that we will get anything. Anyway, we don't need it...and don't really want it. But we have a few years to go before we'll be ready to apply; who knows what will happen?
The problem looming up with baby boomers' retirement is a mathematical one. When the Social Security system was set up, there were 42 people working for every one who was getting benefits. In 2030, when the boomers are drawing their cheques, the ratio will fall to 2 to 1. The system will go broke. Everyone knows it.
Obviously, benefits will be cut - either by act of Congress...or by act of inflation. The latter is our guess.
Bill Bonner,
The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Alan on 17 October 2007:
And it gets worse.....Retirees don't spend as much(in real terms anyway).With or without the credit crunch,peak spending is soon to pass.The boomers are about to bust.But,lest we forget-the generation that will probably be condemned brought the amazing sixties,and then innovated lives and businesses through to the present.They are just getting old..
Comment by jack on 17 October 2007:
Social security for the elderly only encourages moral hazard. Who is going to save for their retirement, when the government says you will be looked after when you are retired? This is one of the reasons that the west consume so much.
The day of reckoning will come one day.
Comment by Dr Coles on 18 October 2007:
Excuse me but American citizens have paid into Social Security all their working lives. Congress gets 15 percent of all the wages in America. 50 percent die before they can collect there paid for benefits. Who is the bad player here? It’s not the American citizen. It’s the incompetent congress. No, matter your political party affiliation, and setting aside your thoughts on issues. We all need to remember what it is to be an American Citizen. We need to make sure our elected representatives obey their Oath of Office and keep their Oath of Allegiance. See http://tinyurl.com/2znnvl Know whom you are voting for.
Comment by Pier Johnson on 19 October 2007:
Dr Coles Says:
Excuse me but American citizens have paid into Social Security all their working lives.
Mr. Coles, your thinking is WRONG, flawed.
Americans paid a dedicated Flat Tax against wages and the pool of this tax collection went into the Sinking Fund known as OASDI.
Really, you should either learn how your government works or drop the rheotrical ploy -- this bogus mantra of "but we paid into it."
Comment by William Hallowell on 19 October 2007:
Interesting post. These are huge burdens for the U.S. You should definitely check out Facing Up to the Nation’s Finances, a nonpartisan project that addresses the long-term challenges of the federal budget. Read our blog (http://facingup.org/blog), check out valuable resources and information and contribute. We'd love to have you contribute to our blog carnival! Feel free to contact me for more info.
Comment by Dr Coles on 20 October 2007:
I think NOT; it's pure propaganda. The American Congress gets 15 percent of all the wages in America. 50 percent die before they can collect there paid for benefits. Who is the bad player here? It’s not the American citizen. It’s the incompetent congress.