The Generation Gap
I'm feeling a little guilty these days. in fact, President Bush sometimes makes me feel awful. He and I both hail from Texas, we've both been Republicans, and we're about the same age. But he's constantly reminding all of us baby boomers that when we first started working each of us was 1 of nearly 7 workers paying Social Security taxes for every retiree. By the time we retire, however, there will only be two workers supporting each of us. As we say in Texas, that ain't right.
But I do wish the president, with a lot of heavy burdens that come with his high office, wouldn't be quite so concerned about us baby boomers. After all, Bush has a lot to worry over: a war against radical Islamist terrorists, wars in Iraq and Afghanistan, a record $412 billion budget deficit, a $617 billion record trade deficit, and of course he has a bunch of economic advisers I wouldn't put in a posse. I sure don't want to be a further burden to the president or anyone else, and I'm sure a lot of my fellow baby boomers feel the same way.
For one thing, we're not quite in the fix the president seems to think: In fact, we boomers are pretty well fixed. Our total net worth is estimated to be $17.5 trillion, and we've got retirement assets of $2.8 trillion, according to the Census Bureau. And while we may be getting older, we're not exactly folding up. In fact, a recent Merrill Lynch survey shows that more than three fourths of us plan to keep working in retirement. We may not make as much then, but we'll continue to earn and add to those boomer billions.
The president and all the rest of us who will be moving into retirement in the years ahead might do a lot more head scratchin' about those young folks who might have to take care of us. They'll have to face the tremendous debt we've built up for them as a result of our budget and trade deficits, our failure to invest in our public education system, and the startling decline in the national savings rate and employer-sponsored retirement options like pension plans. They're the ones who'd better be checking for snakes in their bedrolls.
Baby boomers are not the ones going bankrupt. In fact, Americans between the ages of 25 and 34 now have the second-highest rate of bankruptcy. In first place are those ages 35 to 44.
"It's taking much longer for gen X-ers to achieve financial security, to get out of the rough-and-tumble 20s into real financial stability on the path to savings," says Tamara Draut, director of the Economic Opportunity Program at Demos, a nonpartisan research group. "For a lot of young people, that's just not going to happen at all. They will still be living paycheck to paycheck well into their 40s, even at the upper end of the income spectrum."
Unschooled. Our generation ranks first among all industrialized nations in the number of high school diplomas held by those between the ages of 45 and 64. Our 35-44 age group, however, is in fifth place, and our 25-to-34-year-olds place 10th. Considering that a large percentage of new jobs will require some level of postsecondary education, this is an extremely troubling trend.
The portion of Americans who hold at least a bachelor's degree has risen from 17 percent three decades ago to 28 percent. But those graduates who are completing college are finding that a degree isn't an automatic ticket to financial stability. While more people are attending college, they're leaving school saddled with an average debt of nearly $19,000. Recent college graduates owe 85 percent more in student loans than did their counterparts of a decade ago, according to the Center for Economic and Policy Research. What's more, their annual earnings may be higher than those of high school graduates, but they aren't rising faster than inflation.
The president might want to pull up on privatizing Social Security, too. That won't help the program. Means-testing will, and a bunch of us who don't need Social Security would understand giving up a little for our fellow citizens. And younger Americans may need more help than we older folks do. The Center for Economic and Policy Research estimates that under the proposal to change the indexation formula for benefits, an average worker now in his or her early 20s would receive $152,000 less than the currently scheduled benefits.
Instead of wasting time figuring out how future generations will support the baby boomers, it just might be we boomers who end up supporting America's youth. Now I reckon that's what we'd call a real retirement crisis.
This story appears in the May 23, 2005 print edition of U.S. News & World Report.