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~ Every man desires to live long: but no man would be old.” ~ Jonathan Swift, 1727
~“Growing old is like being increasingly penalized for a crime you haven’t committed.”
~ Anthony Powell, 1973
~ “Old age hath yet his honor and his toil;Some work of noble note, may yet be done, Not unbecoming men that strove with gods.” ~ Alfred Lord Tennyson, 1842
~ “ If men in the future retire with the remaining life expectancy they have now— if these years are added to their working life—it will expand the labor force in 2050.”
~ Ted Fishman, 2010.
~ “Friendship has a strong relationship to how families care for one another. Japan’s century of progress has fundamentally changed both. As Japan ages, many Japanese past retirement are likely to find themselves friendless.” ~ Ikuko Sugawara, 2008.
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In the seemingly interminable budget battles in Washington between Republicans and Democrats, there is a seventy ton gorilla in the room no-one wants really to talk about. This is the by now inevitable aging of our society. By 2050, Americans over age 65 will more than double from 41 million to over 85 million, rising from ten to over twenty per cent of our society. As the post-war Baby-Boomer Generation retires over the next thirty years, it will fundamentally transform our nation. But it will change far more than just our economy and the U.S. Government’s fiscal situation. It will totally reshape the communities we live in : how we are educated, how we work, eat, enjoy recreation, obtain healthcare; the homes, cities and suburbs we live in; and how we relate to each other : in families, communities, and business and voluntary organizations. How well we adapt our society to face these challenges will determine whether the growing numbers of elderly, and all of us, live more prosperously and securely, or in greater want. The U.S.A. is not alone in this. Other advanced nations – notably Germany and Japan – are already experiencing some of the challenges we can expect in future.
Key Questions : What are the economic challenges posed by the Aging of America in 2014-2050 ? How does America compare with other advanced societies? How well are old age and retirement adapting in response to these and other major changes in our society? What more needs to be done to make way for the coming transformation?
Aging of America : Ongoing Changes, Future Challenges : The doubling of the traditional retiree (over-65) population in the U.S.A. will dramatically increase U.S. Government spending on “social safety net” programs – Social Security, Medicare and Medicaid. These will double already by 2023, necessitating reductions in so-called discretionary spending – notably education, infrastructure, research, as well as national defense. That is unless fiscal revenues – taxes – are increased at least to 2001 levels – around 21% of GDP. Because of the low fertility rate of native-born Americans, absent immigration reform and more open immigration, the work force would reduce by 2050. This would place the tax burden of our “social safety net” on the shoulders of fewer working Americans, who would have to pay more. The combined effect would be to put pressure on incomes and savings of younger (working) Americans, who might find raising children of their own much more costly. Meanwhile, further reduced public investments in education, infrastructure and research would further increase poverty and inequality, while reducing innovation.
Other Advanced Nations’ Experiences : Since the 1990s, Japan has faced economic stagnation and slow growth, rapidly increasing over-65 population that will be forty per cent of total by 2050. Already pensions and healthcare programs have come under financial pressures. Meanwhile, poverty among Japan’s elderly has risen greatly. This is sorely testing Japan’s strong societal tradition of social equality – especially as youth face lower wages and higher unemployment. Japan’s education system is also suffering, as schools and universities have to cut back due to declining numbers of youth.
In Germany, meanwhile, elderly poverty is also rising rapidly – now affecting forty per cent of seniors. Stagnating wages and higher unemployment for less skilled workers reduce savings for pensions and retirement. By 2050, sixty per cent of Germans will be dependents (over age 65, or under age 15), Germany’s population will drop by seven million, and school age population will fall by a quarter. In both Germany and Japan, firms are making efforts to employ older workers, bringing them back from retirement.
More generally, across the advanced OECD countries, increasingly countries are giving incentives in pension schemes for workers to retire later. Since 1990, retirement ages have risen again close to 1950s levels – around 64-65 years of age, with more countries planning to raise retirement ages in future, like the USA will do. Countries that fare best in treatment of elderly are ones where population growth is adequate, and income inequality and poverty are lower through faster growth, lower cost healthcare and greater access to higher education and skills.
The Changing Face of Retirement and Old Age in America : Since the 1990s, over thirty per cent more Americans are working well into their sixties and into their seventies. This constitutes a turn-around from the previous four decades in which Americans retiring at or before 65 grew rapidly to become the vast majority. Meanwhile, many Americans over fifty are launching into “encore” or second careers, often as self-employed. Some firms have developed innovative schemes to help older workers prepare for retirement including phased transition to flexible part-time work. This as a way of tapping their skills and experience, while giving them the job satisfaction and stimulation to stay engaged with work. Yet, many more U.S. corporations have still to adapt to the advantages and need of hiring more older workers. Age discrimination against older workers is still perceived to be widespread, despite the strengthening in 1997 of the 1967 Age Discrimination Employment Act (ADEA). A key problem is to convince younger managers and train them in working with older workers.
Poverty among American elderly has been rising, especially since the Great Recession. Over ten per cent now live in poverty overall. But the rate is far higher – over 25% – for Latino and African-American elderly. U.S. pensions generally compare favorably now with those of other OECD countries providing higher retirement incomes on average than others. But they are heavily reliant upon private wealth and other non-statutory, non-public financing – about two-thirds. They thus benefit affluent elderly far more than less affluent and poor. Slow economic growth and rising income inequality in coming decades would increase the numbers of elderly poor and income disparities.
Increasingly, poverty among American elderly – especially over age 75 – is made more frequent by poor health and high medical bills as well as lack of education and skills that limit self-employment options. On the other hand, pioneering experimental programs have been set up as private voluntary efforts to create multi-generational communities. In these, the elderly contribute time and experience and receive care-giver support in return. These are aiming to reverse the shift to nuclear families, and the separation of elderly into retirement communities and/or living alone. The aim is to overcome isolation and loneliness frequently experienced by the elderly by recreating a modern day form of extended family community. This enables them to feel valued and supported. Such efforts are potentially most important for the future. They could enable America to reduce the current incredibly high costs of nursing home care for seniors. Today over fifteen per cent of all Medicaid spending goes to financing such care for indigent elderly, especially women. With a time lag, more and more elderly are getting active in social media such as Facebook and Twitter.
Conclusions – What More Needs to Change? : Major changes are underway in the numbers, living conditions and prosperity of elderly in America and across the other advanced nations. But, in many ways, we are only at the start of a much more fundamental process of long-term change. How well we adapt to and benefit from the Aging of America will depend upon how soon and how effectively our society makes necessary changes : ~ Immigration reform to attract more younger workers and skills from abroad will be key to raising the work force and tax revenues to cover the cost of our growing social safety net for the elderly. ~ Pension schemes will need major revamping to encourage the much healthier older Americans of today to stay working longer. And also to means-test public safety net programs, such as Social Security, Medicare and Medicaid, so their limited funds can better support the truly needy elderly. ~ U.S. private healthcare urgently needs reforming to reduce costs and improve affordability, thus reducing a major cause of poverty among American elderly. ~ A cultural revolution is needed in how U.S. corporations perceive, employ and value their older workers. They need to make a bigger contribution to the future U.S. economy to benefit themselves as well as national productivity. ~ With the rapid rise in their numbers, America’s elderly are at a major turning point. They no longer can be “ghetto-ized” into affluent retirement communities or isolated poverty. Overcoming loneliness and isolation through multi-generational communities and activities will make the later years of life more satisfying, enriched and secure. We need to rethink how we organize our communities, socially and spatially. ~ Short-term fixes – such as block-granting Medicare to the states – aimed at only addressing fiscal aspects of the Aging of America, without understanding the broader context, are doomed to fail. They risk making poverty, isolation and cost of old age far more burdensome in future. The major challenge that is the Aging of America can only be tackled through a more humanistic forward-looking approach.
I, for one, hope that all of us, but especially our political, business and community leaders will lead us in addressing these important challenges for our future.