The number of retirees is now growing much faster than the number of new workers, and the United States is entering an unprecedented aging population, which is expected to reshape the workforce and economy.
For the past 50 years, baby boomers born between 1946 and 1964 have served in America’s workforce like they’ve been eating big meals in anacondas. With an aging population, the workforce is aging more than ever. When they retire, the working-to-retired ratio will be lower than ever.
Falling workers per retiree threatens the future of programs like Social Security and Medicare that help older Americans by taxing active workers. As the proportion of working Americans declines, so will its funding sources. Both programs will face funding shortfalls over the next decade without tax increases and benefit cuts.
Young people’s willingness to work is not declining. They make up only a smaller percentage of the population than baby boomers of the same age. Baby boomers tend to have fewer children than their parents, a trend that continues with each succeeding generation, leaving a shortage of Generation X and millennials to match the growing number of retirees. Research suggests that this demographic change will reduce economic growth.
How Baby Boomers Broke the Population Pyramid
Baby boomers’ withdrawal from the labor force has been moderated by a shift towards working later in life. More Americans are working well into their 60s and 70s. Longevity, financial incentives to retire in the future, and the need to make ends meet. This trend was briefly reversed during the COVID-19 pandemic, but the wave of early retirees has largely returned to work.
As a result, the workforce itself is aging more than ever. In 1984, people under the age of 40 made up over 60 percent of the workforce. Today it has dropped to 45 percent. Over the same period, there were twice as many workers over the age of 60 as him.
Note: May not add up to 100 due to rounding.
The growing number of retirees has increased the demand for medical services. The industry is expected to create more jobs than any other in this decade. However, care deficits already exist and are likely to get worse as the number of people needing care increases and the number of caregivers available stagnates or declines.
Stanford University economist Gopi Shah Gouda said the costs of long-term care in an aging society “keep us up at night.”
“Long-term care is one of the biggest spending risks facing older people,” says Goda. Services such as long-term home health care are typically not covered by Medicare or other health insurance, so “until they qualify for Medicaid, which covers long-term care services, people will be impoverished to pay for long-term care.” It’s going to happen,” she said. ”
When older Americans cannot afford or find care, they often look to relatives for their needs. According to her 2021 KFF poll, about 1 in 5 U.S. adults already provides ongoing support to a close friend or family member. Many people find purpose and meaning in caregiving, but this informal and unpaid work can lead to financial strain, health problems and job turnover.
To prepare for a greyer future, lawmakers need to reach agreement on controversial issues such as longstanding immigration and rights programs in Congress.
Economist Kathryn Ann Edwards said, “This is a numbers hydra.” “And we’re not trying to process those heads.”
More immigrants will fill America’s working-age population, slowing the aging of the country. Immigrants, on average, are younger than Americans and are already a major contributor to the country’s population growth.
Increased immigration also translates into better outcomes for those dependent on long-term care, according to research from the Cato Institute and the National Economic Research Service. However, the last major immigration bill was passed in 1986. The issue appears to be politically stagnant.
After 2033, Social Security will not be able to pay full retirement benefits unless Congress intervenes. However, the program had not been legally updated for 40 years. To avoid bankruptcy, lawmakers are faced with the choice of cutting benefits payments, raising the retirement age or raising taxes.
“We’ve known for 75 years that there are very large birth cohorts,” Edwards said. “A lot of the quoting and dequoting issues associated with this don’t come from those numbers. “