22 Facts About The Coming US Demographic Shock Wave

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

Today, more than 10,000 Baby Boomers will retire.  This is going to happen day after day, month after month, year after year until 2030.  It is the greatest demographic tsunami in the history of the United States, and we are woefully unprepared for it.  We have made financial promises to the Baby Boomers worth tens of trillions of dollars that we simply are not going to be able to keep.  Even if we didn't have all of the other massive economic problems that we are currently dealing with, this retirement crisis would be enough to destroy our economy all by itself.  During the first half of this century, the number of senior citizens in the United States is being projected to more than double.  As a nation, we are already drowning in debtSo where in the world are we going to get the money to take care of all of these elderly people?

The Baby Boomer generation is so massive that it has fundamentally changed America with each stage that it has gone through.  When the Baby Boomers were young, sales of diapers and toys absolutely skyrocketed.  When they became young adults, they pioneered social changes that permanently altered our society.  Much of the time, these changes were for the worse.

According to the New York Post, overall household spending peaks when we reach the age of 46.  And guess what year the peak of the Baby Boom generation reached that age?...

People tend, for instance, to buy houses at about the same age — age 31 or so. Around age 53 is when people tend to buy their luxury cars — after the kids have finished college, before old age sets in. Demographics can even tell us when your household spending on potato chips is likely to peak — when the head of it is about 42.

 

Ultimately the size of the US economy is simply the total of what we’re all spending. Overall household spending hits a high when we’re about 46. So the peak of the Baby Boom (1961) plus 46 suggests that a high point in the US economy should be about 2007, with a long, slow decline to follow for years to come.

And according to that same article, the Congressional Budget Office is also projecting that an aging population will lead to diminished economic growth in the years ahead...

Lost in the discussion of this week’s Congressional Budget Office report (which said 2.5 million fewer Americans would be working because of Obamacare) was its prediction that aging will be a major drag on growth: “Beyond 2017,” said the report, “CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades [due in large part to] slower growth in the labor force because of the aging of the population.”

So we have a problem.  Our population is rapidly aging, and an immense amount of economic resources is going to be required to care for them all.

Unfortunately, this is happening at a time when our economy is steadily declining.

The following are some of the hard numbers about the demographic tsunami which is now beginning to overtake us...

1. Right now, there are somewhere around 40 million senior citizens in the United States.  By 2050 that number is projected to skyrocket to 89 million.

2. According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

3. One poll discovered that 26 percent of all Americans in the 46 to 64-year-old age bracket have no personal savings whatsoever.

4. According to a survey conducted by the Employee Benefit Research Institute, "60 percent of American workers said the total value of their savings and investments is less than $25,000".

5. 67 percent of all American workers believe that they "are a little or a lot behind schedule on saving for retirement".

6. A study conducted by Boston College's Center for Retirement Research found that American workers are $6.6 trillion short of what they need to retire comfortably.

7. Back in 1991, half of all American workers planned to retire before they reached the age of 65.  Today, that number has declined to 23 percent.

8. According to one recent survey, 70 percent of all American workers expect to continue working once they are "retired".

9. A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.

10. A study by a law professor at the University of Michigan found that Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States.  Back in 2001, they only accounted for 12 percent of all bankruptcies.

11. Today, only 10 percent of private companies in the U.S. provide guaranteed lifelong pensions for their employees.

12. According to Northwestern University Professor John Rauh, the total amount of unfunded pension and healthcare obligations for retirees that state and local governments across the United States have accumulated is 4.4 trillion dollars.

13. Right now, the American people spend approximately 2.8 trillion dollars on health care, and it is being projected that due to our aging population health care spending will rise to an astounding 4.5 trillion dollars in 2019.

14. Incredibly, the United States spends more on health care than China, Japan, Germany, France, the U.K., Italy, Canada, Brazil, Spain and Australia combined.

15. If the U.S. health care system was a country, it would be the 6th largest economy on the entire planet.

16. When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around.  Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.

17. It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

18. At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

19. In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

20. Right now, there are approximately 63 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.

21. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

22. The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead.  Social Security and Medicare make up the bulk of that.

So where are we going to get the money?

That is a very good question.

The generations following the Baby Boomers are going to have to try to figure out a way to navigate this crisis.  The bright future that they were supposed to have has been destroyed by our foolishness and our reckless accumulation of debt.

But do they actually deserve a "bright future"?  Perhaps they deserve to spend their years slaving away to support previous generations during their golden years.  Young people today tend to be extremely greedy, self-centered and lacking in compassion.  They start blogs with titles such as "Selfies With Homeless People".  Here is one example from that blog...

Selfies With Homeless People

Of course not all young people are like that.  Some are shining examples of what young Americans should be.

Unfortunately, those that are on the right path are a relatively small minority.

In the end, it is our choices that define us, and ultimately America may get exactly what it deserves.

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RECISION's picture

So where are we going to get the money?

 

A.)  Steal it.

B.)  Print it.

C.)  Borrow it.

D.)  All of the above.

Remington IV's picture

thank goodness for those death panels .... we'll need them sooner than we think

Dr. Sandi's picture

When the time comes, death panels will come into existence locally, without governmental help of any kind.

SweetDoug's picture

'

'

 

I'd like to see the percentage of the people able to retire, those lazy goddamn house cats, the government workers, where the fit in on the pension scale.

 

Top 10%. No problemo.

 

•?•
V-V

dexter_morgan's picture

methinks estimate #12 is way low

bugs_'s picture

oh yeah, forget retirement, forget healthcare, forget 911, forget tap water.

Lord Koos's picture

"We have made financial promises to the Baby Boomers worth tens of trillions of dollars that we simply are not going to be able to keep". 

 

Promises such as, the fuckers in Washington D.C won't spend all the money you paid into social security your entire working life?

 


Dr. Sandi's picture

Hey, the feds had a few wars to finance with that money. And everybody knows that war is good for the economy.

Leraconteur's picture

Until you Americans grow up and realise that you did not pay into something, this will never resolve.

spend all the money you paid into social security your entire working life?

SS was and is a tax. It was spent within 14 days of your receipt of your paycheck. That money is gone. G-O-N-E. Spent on roads, welfare, current SS recipients, War, Space Shuttles, and Obama's golf game.

yogibear's picture

The government will do what it does best. A redistribution of wealth. Take from the people that worked and saved and give to those that squandered.

Like with corporate bailouts, privatize profits, socialize loses.

Yes_Questions's picture

We have made financial promises to the Baby Boomers worth tens of trillions of dollars that we simply are not going to be able to keep. 

 

Whose this we that you speak of?

Villageidiot777's picture

Baby boomers promised baby boomers that they keep their money safe. Not to be given back when needed, but when baby boomers see that baby boomers are FUBA. Makes sense, doesn't it.

22winmag's picture

Why should today's yutes give a shit? They were born into this sorry excuse for a civilized society, they didn't create it.

MisterMousePotato's picture

It is:

Dinosauria, We

Born like this
Into this
As the chalk faces smile
As Mrs. Death laughs
As the elevators break
As political landscapes dissolve
As the supermarket bag boy holds a college degree
As the oily fish spit out their oily prey
As the sun is masked
We are
Born like this
Into this
Into these carefully mad wars
Into the sight of broken factory windows of emptiness
Into bars where people no longer speak to each other
Into fist fights that end as shootings and knifings
Born into this
Into hospitals which are so expensive that it's cheaper to die
Into lawyers who charge so much it's cheaper to plead guilty
Into a country where the jails are full and the madhouses closed
Into a place where the masses elevate fools into rich heroes
Born into this
Walking and living through this
Dying because of this
Muted because of this
Castrated
Debauched
Disinherited
Because of this
Fooled by this
Used by this
Pissed on by this
Made crazy and sick by this
Made violent
Made inhuman
By this
The heart is blackened
The fingers reach for the throat
The gun
The knife
The bomb
The fingers reach toward an unresponsive god
The fingers reach for the bottle
The pill
The powder
We are born into this sorrowful deadliness
We are born into a government 60 years in debt
That soon will be unable to even pay the interest on that debt
And the banks will burn
Money will be useless
There will be open and unpunished murder in the streets
It will be guns and roving mobs
Land will be useless
Food will become a diminishing return
Nuclear power will be taken over by the many
Explosions will continually shake the earth
Radiated robot men will stalk each other
The rich and the chosen will watch from space platforms
Dante's Inferno will be made to look like a children's playground
The sun will not be seen and it will always be night
Trees will die
All vegetation will die
Radiated men will eat the flesh of radiated men
The sea will be poisoned
The lakes and rivers will vanish
Rain will be the new gold
The rotting bodies of men and animals will stink in the dark wind
The last few survivors will be overtaken by new and hideous diseases
And the space platforms will be destroyed by attrition
The petering out of supplies
The natural effect of general decay
And there will be the most beautiful silence never heard
Born out of that.
The sun still hidden there
Awaiting the next chapter.

-Charles Bukowski

Kelley's picture

Today's 'yutes' won't be creating much of anything. They didn't invent radio, TV, cell phones, today's automobiles, DVD's, ATM's, or much of anything. They are relying on things older people invented.

Today's yutes have given us FaceBook, the world's mind sucking tool. 

In addition, a shocking percentage of you are on LONG TERM prescription drugs (30% of teens). In that regard, you're like 50 year olds. So no one should expect too much out of you.

I do expect a shocking percentage of your age group to have Alzheimers disease in their 30's.

Dr. Sandi's picture

Us v. Them. Watch it now on pay-per view.

(All proceeds go to the fund to fund the fund for those with excess funds)

Cabreado's picture

So, Mike...

you've ignited the generation wars again (and just today I was thinking that maybe we're getting beyond them).

Here's what I think:  you and everyone else should stop using the "deserve" thing until you address basic human nature, and fit it into appropriate context, time, history...

Certainly comparing "deserve" among "generations" is a fool's game, and serves no one.
(but it surely feeds some fire)

 

cynicalskeptic's picture

The old contraact that workers had with employers has been voided by employers.  Used to be you worked for a company, put in your time and effort and got paid, got basic benefits and got a pension.  

Companies have looted pension funds and then dropped them entirely - often sticking government (taxpayers) with the accrued liabilities.  Social Security was meant to be a BASIC SAFETY NET - NO MORE.  Social Security was meant to keep the elderly out of abject poverty, out of the County Poor House.  

Employers have dumped health care coverage for the retired - while politicians have pandered to the elderly with more and more medical benefits.  Government pays for Rascal Scooters, Penis Pumos, Viagra and knee replacements for 400lb invalids who refuse to do the therapy needed to make them usable.

Employers have stuck government with the costs of their retired employees and politicians have pandered to this same group by giving them more and more.

instead of investing in our FUTURE educating our young and preventing any long term health care problems they might have (keeping them form getting worse and costing more) we are taxing our young to benefit the old, pandering to the PAST.

There should be rational expectations from people when it comes to what they should 'get' from government.  People should plan ahead and save for theor retirement.  But then government should not be screwing those that HAVE saved or are trying to save.  0.025% interest on savings when REAL inflation is 8%?!?!? WTF?

If you're smart you assume you will get NOTHING form anyone else - and WILL get screwed by government.  You're going to pay into government in the form of taxes, Soocial Security and more but the odds of ever seeing a real return on those funds is appraoaching zero as time goes on.   In the past an awful lot of people died before ever collecting pensions, Social Security or anything else.   Now you're STILL not going to collect - you just won't be dead.

 

Sandmann's picture

Once you give Everyman the vote it ceases to have value and the middle class no longer control political power and spending but simply ride the roller coaster and direct spending towards themselves.  It moves from a private sector self-employed bourgeoisie resenting taxes to a salariat maximising utility out of tax dollars

Leaf of Tree's picture

Are you saying that poor people shouldn't be allowed to vote? Honest question. 

 

On a similar note, hear me out.

I'm a Romanian in his 30's. I want in Romania that voting rights be restricted to ages 18- 60.

Why? Because the people between 18-60 are the one that make up the bulk of tax payers.

Old farts obove 60 lived mostly under Communism and contributed almost nothing to Pension Fund, but now expect decent pensions from youngster and middle aged people that are forced to work hard in capitalism. Fuck'em I say.These old farts always vote the most incompetent socialists that promise all kinds of free shit.

The young of Romania are mostly on the Right of the political spectrum, but are outnumbered by the old farts.

TBT or not TBT's picture

Dependent people shouldn't be allowed to vote, or their vote ought to be counted fractionally, or simply for some mock parliament.

Dr. Sandi's picture

Do we disenfranchise the spouse that makes it possible for the other spouse to not be dependent?

Sandmann's picture

The War Economy created under Truman is what boosted US growth and Sputnik boosted spending on Colleges and University without reforming High Schools to match Soviet standards........the end-result Vietnam + Great Society + Herbert Marcuse........and a generation of activists determined to Spend........copied by Western politicians everywhere as a never-ending debt-fuelled narco-trip.

The fixes simply increased exponentially to service debt accumulated by heady expansionism until it ended up propping up banks and derivatives portfolios...........the motto of The West ?   REDUCTIO AD ABSURDAM

kurt's picture

Propaganda brought to you by Peter G. Petersen of Blackrock

Coldfire's picture

.So where in the world are we going to get the money to take care of all of these elderly people?

What do you mean "we", kemosabe?

kchrisc's picture

" So where in the world are we going to get the money to take care of all of these elderly people?"

Government: Steal more by force.

FedRes: Steal more by 'printing.'

 

"Guillotine accounting: One in, two out."

Kelley's picture

See my reply above. Today's youth will be the new (drugged) elderly by the time they hit 30 or 40.

IOW, it is a whole lot worse than the above article indicates.

Dre4dwolf's picture

Right path? what path is that? the entire economy is based on pharmaceutical drugs and gambling.... little late for any "right path" bullshit.

I Write Code's picture

The real demographic shock wave is not "the boomers" but the much longer average life now after age 65, and really that change has already rolled into place over the past twenty years, it's "the greatest generation" that first lived 20+ years past the funding levels of medicare and social security.  So screw this "shock wave" stuff, it's more a rising tide and it's already risen.

And there is good news too, which is that we have food and fuel for everyone, even with only 10% seriously working.  What we don't have is a good distribution mechanism for it, other than the Fed's printing press.

In other words it ain't your grandpa's world anymore and it ain't never gonna be so stop whining and try to come up with something more constructive.

Hengist's picture

Obummer care fixes everything, death panels takes care of the longevity problem with zero care and takes care of the promises at the same time, pretty awesome and we of Generation X salute the Baby Boomers for coming up with and voting for this in Congress and the Senate.

Negative1's picture

SOYLENT GREEN IS MADE OUT OF SENIOOOOORS!

Akrunner907's picture

ZeroHedge is abut 10 years late on this discussion.  It has been in discussion in Congress going back all the way to 1982 when they working out Social Security the first time, but didn't want to admit the problem.  

Professorlocknload's picture

They admited the problem, just that no one wanted to hear it.

zebrasquid's picture

Aren't there more Millennials than boomers? Once Millennials figure it out, and their generation of politicians start pandering to them, the Boomers are going to be kicked to the curb. After all, Boomer Mom and Dad (or grandpa and grandma) will never know for sure that you voted to take their entitlements away...right?

I say this as a Boomer: can't blame you..we didn't pay as we went(even though some of us did vote against that irresponsibility), so we need to pay now by foregoing freebies). It's simple fairness and the only way to right the wrong. Starvation, lack of medical care..whatever...it's either us that take the hit at 70 or our kids who get screwed for decades. Chance to redeem ourselves. Time to pay the tab, Me Generation.

Professorlocknload's picture

Zero sum, is it? What if we simply took government out of the social welfare and legislating of morality business and just let the chips fall? Or, should I say, let the healing begin.

Sometimes I believe the Constitution should have started and ended with the first line in the first amendment, "Congress Shall Make No Law," and left it all to the States, where each could choose which laws he would prefer to live under.

Central Planning doesn't work.

Vooter's picture

"Chance to redeem ourselves. Time to pay the tab, Me Generation."

LOLOLOLOLOL...yeah, okay. Just keep looking for my "payment"--it should show up any day now....

Mr. Crisp's picture

Something like Detroit is our future. Unless we can revive meaningful economic growth again (...<snort>...), or cut gov't obligations (yeah, right).

America could still be saved, (maybe), if some real leaders with brains and guts started now.

 

mt paul's picture

Detroit should grow marijuana

sell it to Colorado..

Dr. Sandi's picture

Not a bad idea. At least they'd have incentives to bulldoze the remaining deathtrap houses for some open growing space.

gann1212's picture

not to worry. zero hedge will fund the retirement system. what could go wrong

headless blogger's picture

Don't worry!! This is all going to be resolved once 200 million Chinese begin migrating to North America creating a huge tax base. They should start showing up en masse sooner than later.

Villageidiot777's picture

You are extremely optimistic. Sure chinese will come, work on their farms with their own kinds. They won't be contributing anything to rest of the society or at least very bare minimum. They will build a country within country, kind of like Vatican in Rome but much bigger and even meaner.

syntaxterror's picture

Barackenstein will pay for it. And nobody will say shit about it.

OpTwoMistic's picture

The 10000 a day is not reflected in the unemployment numbers.

Kelley's picture

But they are reflected in the death panels.

knowshitsurelock's picture

So where in the world are we going to get the money to take care of all of these elderly people?

Print it out of thin air like everything else.  Kick the can down the road by releveraging the debt, until it implodes.

Same as it ever was.