How Big a Burden Will Boomers Be?

Much of the demographic "press" over the past few months has been about the increasing diversity in the ethnic identity of Americans. To be sure, this has been an underlying message of "concern" about this emanating from the Trump administration. However, in the background is a bigger demographic change--the aging of the Baby Boomers. The U.S. Census Bureau just today posted a demographic snapshot of the older population.

The growth of the U.S. population age 65 and older exceeds that of the total population and the popula­tion under age 65.  Lower birth rates and increased longevity have led to this rapid growth not just in the United States but across the world.  So what does it mean to be a part of this increasingly larger segment of American society?

The website allows you to click on different characteristics for different states and make your own comparisons about the current older population. Very cool!

But what those maps don't tell us is how well prepared the Baby Boomers are for old age as they rapidly move into this time of their life. A story on CBS News today suggests that the picture is not as good as we might hope.

Boomers have accumulated less household wealth and carry more debt relative to those who've come before them, according to the Sightlines report recently released by the Stanford Center on Longevity (SCL). Given that boomers will likely live longer and rack up higher lifetime medical costs than prior generations, the inevitable conclusion is that boomers will face some tough challenges during their retirement years.

The Sightlines report compares the household wealth of four generations as of 2014:
    Older silent generation, born before 1942
    War babies, born from 1942 to 1947
    Early boomers, born from 1948 to 1953
    Mid-boomers, born from 1954 to 1959

These are close to, although not identical to, the generational breakdowns that demographers typically use, but still useful.

Boomers are carrying more debt of all kinds -- mortgage debt, student debt and credit card debt -- compared to older generations. For example, the proportion of homeowners age 65 and older who haven't paid off their mortgage rose to 35 percent in 2012, up from 23.9 percent in 1998. The median outstanding balance almost doubled, from $44,000 to $82,000.

Boomers will need to learn how to move forward with their current circumstances. They can't go back in time and save more for retirement or accumulate less debt. And it'll be very difficult for them to save enough in their remaining work years to make up for retirement savings shortfalls.

The bottom line is that Baby Boomers are poised to be a larger burden to the younger generation than previous generations of people moving into the older years. There are lots of them, and they are not very well-prepared financially for retirement. Cutting Social Security and Medicare benefits (as some Members of Congress have proposed doing to pay for the big tax cuts earlier this year) will not help. The obvious solution is to recruit more immigrants, but that doesn't seem like a popular option at the moment...