Watchdog Blog

Saul Friedman: An Untouched Issue: The Aging of America

Posted at 8:13 pm, March 18th, 2008
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If I may interrupt the campaign for a moment to bring up a mega-issue that is barely discussed but will confront the next several presidents–the aging of America and its consequences.

Older people, according to most polls, are the most diligent voters. And according to a September Pew Research study, people 50 years and older are also among the most knowledgeable. Indeed, persons over 65 scored almost as well as college graduates on a current events quiz.

What’s more, according to a May, 2007, Brookings Institution paper, “Mapping The Growth of Older America,” the 77 million aging boomers, or “pre-seniors,” will create a “senior tsunami” during the next few years as they prepare for retirement and their older years.

However, my experience writing a seniors column for the past 11 years tells me that millions of these boomers fear the prospects of growing older and having to quit work, and they view the future darkly especially now, as the stock and real estate markets have tanked. For many the crisis has come just as they needed the money for retirement in their 401(k)s.

These older Americans, boomers and the seniors of the World War II generation, are the fastest growing population group in the country, according to the Brookings study. They are part of what Dr. Robert Butler, a Pulitzer Prize winning aging specialist, calls “The Longevity Revolution,” the title of his new book, which deals with the consequences of the remarkable increases in life expectancy in the 20th century.

But the growth in life expectancy, Butler told me in an interview, has also become a “paradox of longevity,” for the aging of the nation has ignited fears widely expressed by demographers and conservative thinkers that society and its medical and nursing facilities and government budgets could be overwhelmed by what have called this “gray peril.”

Indeed, the aging of the nation is, as Butler says, an imminent and great problem. But you wouldn’t know it from the rhetoric of the presidential campaign. The candidates speak to an extent of obvious issues, like Medicare and Social Security. But little is said about the more fundamental and complex issues of aging.

As you might expect, the Democratic candidates offer helpful proposals on their Web sites for some current problems confronting today’s seniors. Sen. Hillary Clinton has worthwhile suggestions to help improve nursing homes and pay for long term insurance. Sen. Barack Obama would tackle the coming shortfall in the Social Security trust fund by calling for a needed raise in the cap on payroll deductions for higher salaried workers. And both favor cutting back on the Bush administration’s privatization of Medicare and aiming for universal health care.

Republican Sen. John McCain, who is 71 and eligible for Medicare and Social Security but will never need either one, has no proposals to strengthen them; he would cut them back in order to save money for further tax cuts.

The Democratic proposals and some Republican alternatives, however worthwhile, are palliatives. No one is speaking at all about the aging tidal wave and how the nation should prepare for it. If people live longer, there is a greater likelihood that they’ll get sick. One in eight boomers may develop Alzheimer’s; how shall they be cared for?

The less discussed problem for Social Security is not its future finances; which may be easily solved. What is not so easily solved are the trends that will make Social Security less dependable as a solid foundation for retirement security. According to Alicia Munnell of Boston College’s Center for Retirement Security, Social Security was designed to replace 40 percent of the average worker’s final income and it has done so until now. But that is going down to 30 percent in the next few years, because of rising taxes on Social Security, increasing the retirement age to 67 and larger costs for Medicare premiums, which are deducted from Social Security checks..

Furthermore, Social Security may become one of the last of the defined benefit pensions, for old-fashioned company pensions, which guaranteed payments for life based on salary and length of service, are disappearing. The reasons include the decline of unions, company bankruptcies, and naive faith in the market among younger workers. In place of pensions, employers have offered 401(k) plans, to which the employer may or may or may not contribute. They’re a good deal for the bosses; all the risk and responsibility is with the worker. They are only lightly regulated. And unlike company pensions, workers can tap into their 401(k) if they need the cash. Indeed many people are using their retirement savings plans these days to prevent foreclosure on their homes or to pay medical bills.

Most Americans don’t have any such savings plans. The average American saving rate is below zero. And Munnell’s studies have found that those workers who do have 401(k)s, don’t save as much as they could or understand the market. As a result, says Munnell., even 25 years after such savings plans were established, the typical worker aged 50 to 64 has accumulated only $50,000 in their 401(k), not nearly enough for retirement.

In the face of a roller-coaster economy, job losses, fewer union protections, soaring Medical costs, little or no health insurance protection for workers, much less retirees, how can the boomers and those who come after them afford to retire? How will the nation handle the “paradox of longevity?” Or maybe we can’t afford and don’t want so many old people. Who in this long campaign–reporters or candidates–will ask such questions?

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