Boomers will change America again, by retiring

Boomers will change America again, by retiring

By Rick Montgomery
McClatchy Newspapers

KANSAS CITY, Mo. — The boomers are going to ruin everything.

No, they are going to save us all.

With the oldest baby boomers turning 60 this year, the debate escalates and forecasters are passionately split.

Economist Peter Peterson, for one, sees the global graying of the baby-boom bunch as "a massive iceberg ... dead ahead," threatening to capsize international markets, to say nothing of Medicare and Social Security.

Increasingly, though, others voice optimism for "the new old" — the promise of a healthier, wiser, more socially conscientious retirement realm in which those boomers will successfully transform America, as one book predicts.

All experts agree that the sheer size of the baby-boom generation — one-fourth of all U.S. citizens today — will be felt, for better or for worse. It has been felt since their first breaths.

"The sky-is-falling crowd is saying if present trends continue, we're going to have a hard problem — and that's absolutely true," says Emily Kessler of the American Society of Actuaries, the people who do the math to project the future. "Something's got to give."

The common analogy: Picture what happens when a python (society) devours a pig (76 million U.S. babies born between 1946 and 1964). The swallowed swine slowly inches its way through the digestive tract, expanding and misshaping all on its way.

You begin to understand the cause of the school booms of the 1950s and '60s, the housing crunches of the '70s and '80s, the mutual-fund madness of the 1990s.

What might become of the stock market of the 2010s when retirees cash in their 401(k)s? Or nursing homes of the 2020s?

In his new book, "The Greater Generation," Leonard Steinhorn argues that baby boomers have long taken undue blame for causing societal problems. In fact, he says, their achievements in upholding racial and sexual equality, launching the environmental movement and insisting on government openness deserve as much praise as was heaped upon the World War II generation — crowned "the greatest" by Tom Brokaw.

Steinhorn foresees boomers in old age pouring into social causes, placing the common good above material wealth — even if that means cutting back on entitlements — and working to protect the environment for their grandchildren.

Put on those bifocals. There are at least two ways of looking at the future.

Health care

The dark side: Spiraling health costs of the past 20 years will only worsen as boomers grow older and get sick. Federal trustees of the Medicare program predict the hospital-insurance trust fund will run dry in 2018.

The American Hospital Association already reports 118,000 vacancies for registered nurses. By 2020, the government predicts the nursing shortfall will swell past 800,000.

Rising levels of obesity could complicate matters: Boomers on average are heavier than their parents were 30 years ago, putting them at higher risk for heart problems and diabetes.

The bright side: A lifestyle of exercise, less drinking and far less smoking will help keep boomers out of critical-care units, their medical needs diffuse and manageable.

Their good health is showing: Despite the graying of the largest generation in human history, the big boom hasn't yet been felt by hospitals, which are reporting fewer inpatient stays nationwide.

A Census Bureau report last spring charted steep and steady decreases in chronic disabilities in the elderly population, raising hopes that "the impact of this baby boomer sunset may be gentler than had been feared," according to The New York Times.

Stock market

The dark side: Markets tank as boomers start selling their stocks and other assets to fund their retirement. The economic booms of the past 15 years — credited in part to the high incomes and investments of boomers hitting the sweet spots of their careers — will devolve into decades of busts.

Wharton School professor Jeremy Siegel warns of "the horrible scenario" in which the value of stocks, government bonds and even homes could plunge in half over the boomers' remaining life span. That's not just because they're selling but also because there won't be enough younger Americans to buy it all.

The bright side: The great sell-off may never happen — at least not to the extent that many fear. Nearly 90 percent of today's stocks are held by the wealthiest 10 percent of Americans, who are more likely to live off interest income and keep a big chunk of their assets for heirs.

In any case, a generation spanning 18 years won't cash in all at once.

Retirement income

The dark side: Believe what you hear about the Social Security trust fund racing toward depletion by 2040, according to the trustees' latest estimates.

The population curves pack a double punch: Not only are boomers so large in number, but the so-called X generation that follows is unusually small.

The U.S. birth rate now is near all-time lows. In three decades, only two workers will be paying into Social Security for each retiree taking benefits.

"Add to that the fact people are living longer and longer, and the tidal wave becomes a tsunami," says Kessler of the actuarial society. Boomers have themselves to blame. Their reliance on birth control and preference for smaller families mean fewer people will be left to subsidize them in old age.

The bright side: Really, no silver lining here.

Everybody knows Social Security is in trouble, as are company pension plans. Wake-up calls are building to raise the retirement age and broaden incentives for employee savings plans.

"There's an awakening, a conversation building all across the spectrum of retirement," says Kessler.

"It's becoming obvious that if boomers just mimic their parents in retirement, there's going to be a hard landing. For their parents, retirement was a single event. For the boomers it's got to be more of a process" of tip-toeing out of the workforce in stages.

Copyright © 2006 The Seattle Times Company