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E-mail a friendYOUNG VOICES
Drop in the Bucket
The day we all saw coming has finally arrived, according to USA Today. Kathleen Casey-Kirschling has become eligible for social security benefits. If you are thinking that one more person collecting their check is just a drop in the bucket, you are right. However, Kathleen Casey-Kirsching, the first baby boomer (born on January 1, 1946 at 12:00:01), is just one of 80 million Americans who will be looking to collect their benefits from Social Security and Medicare in the coming years. I think we are going to need more buckets...
The impact of retiring Baby Boomers will be drastic. Richard Wolf predicts that by 2030, the number of Social Security recipients will increase from 50 million to 84 million and an increase in Medicare recipients from 44 million to 79 million. That means that there will only be two workers paying for the benefits of one retiree.
According to the Congressional Budget Office, there are two main concerns for both Baby Boomers and those working to pay for Baby Boomer entitlements. The first issue is that the number of people retiring is going to outnumber the amount of people joining the taxpaying workforce. At the same time, the benefits per retiree is going to increase. These are not the hallmarks of a self-perpetuating system. The second issue is that Baby Boomers have not saved enough money for retirement, relying on Social Security or serendipity, whatever the case may be. This could result in less federal revenue, because those born between 1946 and 1964 will not be able to contribute the economy through investment, productivity, or wages.
This problem could have been addressed years ago, but Democrats refused to negotiate with Republicans on personal retirement accounts (President Clinton suggested a very similar plan during his administration, but fellow Democrats urged him to drop it so that they could use it against Republicans who supported it during the 1998 elections).
Today, Hillary Clinton continues to ignore the impending crisis.
Fortunately, other Democrats have finally come around to President Bush's plan for personal accounts. According to the Wall Street Journal, the details will have to be negotiated, but the new system would combine the traditional tax-based system with investment-based personal accounts. If this plan, or something similar, is adopted, a 2% payroll contribution to personal retirement accounts will generate enough funds to maintain the monthly benefits specified in current law, without increasing taxes on the working populace.
The Social Security system will buckle under the coming flood of Baby Boomer retirees, with or without personal accounts to plug the holes. Now is the time for Congress to ask itself what is the better policy for the future: hire more little Dutch Boys or build a better dike.