In our opinion: Boomers' lack of planning complicates entitlement reform

Published: Saturday, Oct. 19 2013 1:43 p.m. MDT

The generation that would never grow old is now approaching retirement age, and many of those baby-boomers are facing the harsh reality of not being prepared to ease into a non-working life.

Associated Press

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The generation that would never grow old is now approaching retirement age, and many of those baby-boomers are facing the harsh reality of not being prepared to ease into a non-working life. Their predicament carries consequences for future generations and gives urgency to the debate over entitlement reform.

A national poll shows that 47 percent of workers over age 50 say they plan to work longer than they thought they would, and the majority of those say it’s because they are financially unprepared to exit the labor force. Their situation is a sobering lesson for younger workers who would benefit by taking more seriously the need to plan for retirement.

Certainly, the recession of 2008 sapped 401K accounts and left older workers with less ability to afford a comfortable retirement, but there is also ample evidence that many baby-boomers failed to save and plan at a level necessary to retire at the age they anticipated. Their quandary will now largely be left to others to deal with.

The poll, conducted by the Associated Press-NORC Center for Public Affairs Research, shows that some retirement-age workers wish to remain at work more as a matter of a lifestyle choice rather than the need for continuing income. When to stop working is a personal decision, but the economic realities are that many will not be able to find continuing employment — whether they want it or not — and those who do will, in many circumstances, be displacing younger workers and reducing their chances for upward mobility.

Add to that the fact that baby-boomers are likely to live longer than previous generations and you have what economists see as a domino effect that will severely stress the social safety nets that prop up retirees. There is no excuse for policy makers in Washington to procrastinate on tackling the issues relevant to the long-term efficacy of Social Security and Medicare.

Having paid into the system throughout their working years, boomers are deserving of their Social Security benefits. But there is justified concern that in its present structure, the system may not be able to sustain itself, and simply pouring more money into it will exacerbate the national debt with attendant consequences there.

The prompt consideration of substantial reform is critical, and it should include attending to the formula that governs annual increases in benefit amounts. There should also be consideration of the use of means testing that may reduce payments for those well off enough to get by without full benefits. The same is true for Medicare.

An equally vexing question is how to impress upon younger people the need to save for retirement as a matter of personal financial responsibility, if not social responsibility. Members of the millennial generation, largely the children of the boomers, are themselves somewhat nonchalant about saving. And surveys show people in their 30s and 40s — peak earning years — are also not saving adequately.

The situation facing the baby-boomers should and eventually will force a reckoning in the management of entitlement programs. It should also serve as an object lesson for their progeny who, if they choose to act accordingly, might easily avoid the same fate.

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