Don't blame boomers for Social Security dilemma

Susan Reimer says blame for the coming retirement crisis goes to the younger generation's low birth rate, not the older generation's excesses

April 22, 2013|Susan Reimer

We baby boomers get blamed for just about every economic hiccup, because there are so many of us.

And our children are particularly furious because they believe the crisis in Social Security, which may affect their ability to retire, can be laid at our feet like kindling for a burning at the stake.

They are convinced we boomers, with our outsized appetites and sense of entitlement, are going to consume everything on our way to the cemetery, right down to the amount of ground we leave for those who die after us.

But data from the Social Security Administration itself, provided by chief actuary Stephen Goss, demonstrates that boomers are not the pig-through-the-python that we have been described as being. That we are not a post-war aberration that will die off and disappear, leaving a balanced population behind.

The population is getting older, said Mr. Goss, who looks into the future for the SSA. Certainly, the boomers are part of that. But generally, people are living longer regardless of when they were born.

"In real numbers and percent of the whole, the real growth will be in the 65-plus age group," he said. And that will continue even after all the boomers are dead and gone.

In 1940, for example, there were 1,800 deaths annually per 100,000 population. Today, that number is about 750, and by 2090 (Mr. Goss looks really far ahead), that number will be about 400.

Those of us who reach the age of 65 can expect to live about 20 more years, he said.

But that would not be a problem for Social Security if there were enough workers coming along to support us in our old age. And there aren't. That's because the birth rate is dropping. It used to be about 3.3 per woman, and it is now down around 1.9.

"If the birth rate had stayed at about 3," said Mr. Goss, "we wouldn't be talking about Social Security right now."

That means there will not be enough workers paying into the system to support the aging population — and not just boomers — who will need the benefits.

"Three workers sharing the benefit requirements of one worker," said Mr. Goss, "is a better situation than two workers."

Why has the birth rate declined? The Pill. But not in the way that you might think.

Throughout the 20th century, he said, women, when asked, said they wanted to have two children. That expectation of family size never really changed.

The advent of effective birth control meant that women could now have the number of children they wanted to have, and the birth rate started to decline from 3.3 to about 2 between 1965 and 1970, Mr. Goss said.

It has dipped again, to about 1.9, in recent years, but Mr. Goss said that is likely the result of the recession.

So, what is the answer? How do we ensure that there are enough workers paying into Social Security to comfortably provide the benefits for retirees, a group that will continue to increase long after the last boomer has left the scene?

Interestingly, immigration reforms.

Immigrants equal "new" people in the same way live births do. There were 4 million babies born last year, and about 1 million immigrants came into the country. That had a net effect, Mr. Goss said, of a birth rate of 2.5.

Building walls along the Mexican border and other barriers to immigration are not in our own best interests.

So, if I am reading this correctly, the boomers are not to blame for Social Security shortfalls that are expected to begin in 2033.

It is our kids. They aren't having enough babies!

You're welcome, fellow boomers.

Susan Reimer's column appears Mondays and Thursdays. She can be reached at susan.reimer@baltsun.com and @SusanReimer on Twitter.com.

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