The 1946-64 post-WWII Baby Boom saw the advent of the biggest generation of Americans ever. As this generation has worked its way through life, like a pig swallowed whole by a snake, it has wrought enormous and lasting changes on each stage of life. The generation that gave us free love and alternative lifestyles is now going gray, and that will have enormous implications for everyone. In the 1990 census (temporarily the most recent census for which detailed breakdowns are available), Baby Boomers made up almost a third of the population. 1996 US Department of Commerce projections indicated that the number of people aged 65 and over is expected to grow from 39 million in 2010, a year before the first Boomers reach that age, to 69 million in 2030. In 1990 13% of the population was over 65; in 2030 20% of US residents will be over 65. What will be some of the implications of this aging of America?
As the Baby Bulge has worked its way through the snake, it has created new markets and industries along the way. As their faces began to sag and they began to fight the battle of the bulge in the late 70s and 80s, the self-indulgent generation spurred the explosion of on-demand plastic surgery and liposuction. As this large and wealthy generation begins to retire, it will represent a huge opportunity for scientists and entrepreneurs who can provide solutions to ward off the vagaries of old age. Great advances of course continue to be made in medicine, and they will likely increase exponentially, powered by the huge potential markets returns.
Another likely change will be the continuation of the trend towards later and more active retirements. Already many elderly people are working well after their 65th birthdays, both out of choice and necessity: Choice because they long to stay active to alleviate boredom and retain a sense of purpose. Necessity because healthier lifestyles and improving medical care mean that a 65-year old can reasonably expect to live another 20 or 30 years, potentially longer than his or her nest egg. Young-at-heart Boomers also promise to be the most active generation of seniors ever. Given their reluctance to go quietly into middle age, it seems a safe bet that they will redefine what it means to be “old,” and likely change forever our image of the average 70-year old as infirm.
Perhaps the most contentious question, however, is how the economy will react once the Boomers move en masse into retirement. The dependency ratio, which measures the number of children (0 to 17 years) and elderly (65+) to the number of people of working age, is expected to increase sharply from 60.2% in 2000 to 78.7% by 2030. Although the dependency ratio will still be lower than it was in the 1960s, the difference is that it is growth in the ranks of the elderly, rather than children, that will be driving the increase. The Healthcare and other needs of the elderly are likely to heavily tax the productive capacity of the working age population.
It has been suggested that a contributing factor to the 1990s economic boom was the fact that it roughly coincided with the period when Baby Boomers began to reach their peak earning years (45-54 years of age). Through these years they can be expected as a group to produce more than they consume, building up their retirement nest eggs and boosting the economy with their unprecedented spending power. As they age and retire, however, they can be expected to metamorphose from net investors to net consumers. Furthermore, should a large proportion of Boomers outlive their savings, they will have to rely on their children and grandchildren for support. The US Social Security system may not offer much solace. If left unchanged, Social Security will begin in 2015, according to AARP estimates, to pay out more in retirement benefits than it takes in. By 2037, when the over-65 population is estimated to make up roughly 20% of the population, the program’s principal will have been exhausted. The aging of the population clearly has important economic implications.
Through each stage of their lives, members of the Baby Boom generation have been pioneers, changing the perceptions and expectations of all who follow. As they mature and become the nation’s senior citizens, they will forever change our conception of this stage in life, too.