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Greenspan's Sobering Prospect About Baby Boomer's Social Security What the Federal Reserve Chair had to say about baby boomer retirement and Social Security in 2004. The following excerpt is taken from Federal Reserve Chairman Alan Greenspan's February, 2004 testimony to the House of Representatives' Committee on the Budget, in which he outlined America's uncertain economic future with regard to Social Security and Medicare. "In 2008--just four years from now--the first cohort of the baby-boom generation will reach 62, the earliest age at which Social Security retirement benefits may be claimed and the age at which about half of prospective beneficiaries choose to retire; in 2011, these individuals will reach 65 and will thus be eligible for Medicare. This dramatic demographic change is certain to place enormous demands on our nation's resources--demands we almost surely will be unable to meet unless action is taken. "The budget scenarios considered by the Congressional Budget Office in its December assessment of the long-term budget outlook offer a vivid--and sobering--illustration of the challenges we face as we prepare for the retirement of the baby-boom generation. "Most experts believe that the best baseline for planning purposes is to assume that the demographic shift associated with the retirement of the baby-boom generation will be permanent--that is, it will not reverse when that cohort passes away. Indeed, so long as longevity continues to increase--and assuming no significant changes in immigration or fertility rates--the proportion of elderly in the population will only rise. We will eventually have no choice but to make significant structural adjustments in the major retirement programs. "One change the Congress could consider relates to the age at which Social Security and Medicare benefits will be provided. Under current law, and even with the so-called normal retirement age for Social Security slated to move up to 67 over the next two decades, the ratio of the number of years that the typical worker will spend in retirement to the number of years he or she works will rise in the long term. A critical step forward would be to adjust the system so that this ratio stabilizes. The degree of uncertainty about whether future resources will be adequate to meet our current statutory obligations to the coming generations of retirees is daunting. Although forecasting the number of Medicare beneficiaries is reasonably straightforward, we know very little about how rapidly medical technology will continue to advance. Because medical technology expands the range of treatment options, it also has the potential of adding to overall spending--in some cases, significantly. As a result, the range of possible outlays per recipient is extremely wide. "I believe that a thorough review of our spending commitments--and at least some adjustment -- is necessary. I also believe that we have an obligation to those in and near retirement to honor what has been promised to them. If changes need to be made, they should be made soon enough so that future retirees have time to adjust their plans for retirement spending and to make sure that their personal resources, along with what they expect to receive from the government, will be sufficient to meet their retirement needs." Back To Mature Market News → Go To The GenerationTarget.com Mature Market Bookstore → |
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