Will the Boomers Really Bust the Retirement Bank?

You’ve heard the warnings no doubt: Baby boomers are going to bust the bank. The rumors have flown around for years: Social Security and Medicare cannot handle the strain of the boomer era ushering into their golden years, there are not enough younger workers to support the baby boomer era, there is no time to handle the crisis, the economy can’t handle it, the government can’t handle it, and there will have to be major tax increases and decreased support for retirement programs to handle it.

We’ve been hearing these things for years, but are they true? Are we seeing the whole picture?

There are a few things we have failed to notice when making the assumption that the economy cannot handle the strain of the baby boomers retiring.

If - and that is a big IF - the workforce happens to shrink, our demand for labor will grow. This means higher wages and higher taxes coming out of payroll. The end result is more money for the government and more money for Social Security and Medicare. This is a positive thing, should it happen: more money for workers and more money for the government.

It is hard to imagine our workforce shrinking though, because nearly 60 percent of women work outside the home today and that number is only growing. Forty or so years ago there were hardly any women working outside the home, so it appears that even though we are worried that our workforce is shrinking, in some areas it is actually growing. The Social Security Administration estimates that even in 2030 nearly 55 percent of our population will be of working age and able to provide goods and services. That is more than in the 60’s and 70’s, and only a few percentage points less than today.

While many computer and office jobs can be outsourced to other countries, we are always going to need people to work in the service field. As baby boomers retire, they are not going to stop spending money. They will still be adding to the economy by employing cooks, drivers, gardeners and other service employees. Best of all, these jobs do not require college degrees and will always be available.

Still of course, the economy is not doing well and the baby boomers are starting to cash in on their retirement. We haven’t seen a bust yet, let’s hope for the best.





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