On New Year’s Day, the first baby boomers turned 65, beginning the largest generational migration toward Social Security and Medicare since the programs were launched 75 and 45 years ago, respectively. If these essential programs are to remain solvent, the nation must confront some hard truths and consider changing our understanding of them as age-eligible entitlements.
In addition to the day of reckoning for Social Security and Medicare that the first boomer 65th birthday brings, the nation must consider other costs associated with having a large segment of the population crossing this age threshold. Maine, as one of the grayest states, also must think about the implications of boomers dominating the population.
The baby boom generation, which numbers about 75 million, was launched by men returning from World War II, eager to make up for the years spent in Europe or the Pacific. They married, had children soon after and created a housing shortage that challenged policymakers for nearly a decade. Their children, born between 1946 and 1964, also created a demand for schools, which were built by the score in many suburban communities in the postwar years.
The biggest bulge in the boomer population curve reached adulthood in the late-1960s through the early 1970s. That segment of the generation drove profound cultural and political changes, which have been well understood. The generation’s economic impact has been less frequently discussed, but is no less profound. Boomers born in the mid-1950s to early 1960s, now in their early to late 50s, attended college in record percentages. And they achieved material success in unprecedented terms. Their spending — on second homes, vacations, new vehicles, boats and the like — has driven the economy for decades.
As boomers become seniors, they spend less, which has serious implications for the economy. They may downsize their living accommodations. Fortunately, the generation has valued healthful living, so they may consume fewer health care dollars than the generations that embrace tobacco, obesity and a sedentary lifestyle.
Since birth rates never achieved those levels again — peaks in 1971 and 1991 came close — the generations that followed boomers are not producing enough paychecks to pay for those who will draw Social Security and Medicare benefits in the next 10 to 15 years. So hard decisions lie ahead. One obvious but controversial solution is to eliminate benefits for the wealthiest of retirees. Also, the time has likely come to consider offering the benefits to those who actually need them.
Maine faces specific challenges because of boomers. One data set ranks it as the state with the highest percentage of boomers (about 410,000 of its 1.3 million residents). More information will emerge as new census data is released. State government would do well to study how other states that draw retirees manage to remain vibrant; states in the Southwest come to mind.
Boomers are not all bad news for Maine. On the campaign trail, Gov. Paul LePage suggested changing the state’s tax code to exempt pension income as a way to draw more such people here. But boomers must be balanced by young families. There are no easy answers, but policy makers must begin by confronting these demographic realities.