The Aging Population in the United States and Its Effect on Our Economy

1.) What difficulties—from retiring baby boomers in the United States to a graying China, to the massive overhang of Europe’s elderly—can private corporations, governments, and other sectors expect as the aging revolution unfolds across the globe? How will changing demographics affect workforce composition? Retirement age? Pension outlays? Taxation? Immigration? Economic growth? How can governments, corporations, and nongovernmental organizations work together to address these issues?

In general, countries experiencing high fertility and rapid population growth, have a “young” population structure and the important policy considerations are if there are enough schools and, sufficient jobs and housing to accommodate this population. Countries with “old” population structures face the problems of structuring and developing retirement and health systems to serve this older population and also they have a considerable reduction the number of the working force. The decline of the work force is one of the most dramatic economic tendencies of the past four decades in the United States. The individual’s decision of whether to stay in the workforce or to retire is based on the collaboration of a number of factors including the following: eligibility for Social Security benefits, availability of and benefits under an employer-financed pension plan, work

The baby-boomer generation is aging and adding more beneficiaries’ at an increasing rate than ever before and is estimated to impact the federal deficit by over 17% by 2020. Many other countries have National Healthcare that provides better care at a much lower cost. Medicare was the motivation for a universal healthcare plan and a program for the U.S. could have a positive impact. (Starr, 2011).

John F. Kennedy once said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.” America has always had its challenges when facing economic issues; however, the government has the tendency to avoid the reality of what approaches in the future. There have been several attempts of reform for these types of economic problems. Nevertheless, most have not been successful, and time is running out. One of those issues is the graying of America. What is the graying of America? It is the demographic trend consisting of all the baby boomers that are aging and getting closer to retirement. Even though it does not seem like an area of concern, there are many

  (a) Cuts in Medicare. The elderly on Medicare will see their benefits changed dramatically. The biggest item being used to pay for the new program is more than $500 billion in cuts to the Medicare program at a time when 72 million baby boomers become eligible for it in the next decade. The second biggest move to pay for this is by raising and expanding the Medicare tax.

In our reading "Choices are Everywhere: Why can't we just have it all?" from the Federal Reserve Bank of St. Louis we learned that social security, national defense and healthcare programs are the top government spending categories (2013). While I believe all three are good places, I also feel like that 528.4 million dollars could have gone to our education system (not all but definitely some). According to usgovernmentspending.com the United States, in 2014, spend $1,283,079.6 million on healthcare (this includes local, state, and federal) while $962,948.4 million went to education (Total 2014 Government Spending). That is a $320,131.2 difference between total healthcare and education funding. I believe that is the opportunity cost; some of the money that went to PP that could have gone to education.

Economic factors will play a role in baby boomers working beyond the age of 50. Due

Notably, the elderly populace is growing rapidly, and will reach 3.4 million or 12.8% of the population. Eventually, in the next thirty years older adults will comprise of 20% of the total population due to the aging of 76 million baby boomers (Olson, 2001). Seeing that, entitlement programs and means-tested benefits, are presented, in order to bolster this increment of older adults. Accordingly, around 96% of the American workforce is secured by Social Security and it is likewise estimated that 58 million American will receive a total of $816 billion in Social Security benefits (Moody and Sasser, 2015). In fact, today 56 million or 17% of the population is enlisted in Medicare (Leonard, 2015). Therefore, this has presented an open deliberation about the eventual fate of Medicare and Social Security and regardless of whether changing Medicare and Social Security to means-tested benefits, instead of entitlement programs can resolve the policy issues.

Over the last 8 years especially, the national spotlight has been focused on government programs, specifically Medicare and Medicaid, whether these opinions be positive or negative. Although many people believe that these governmental acts only include negative aspects, this is in fact wrong, as there are many positives. Medicare, the commonly known health insurance program for people 65 and older, has positively contributed to the American society for the past 50 years. Medicare has helped elders financially , increased the quality of care we give to elders, and provided more jobs throughout its existence.

Throughout the 21st century, there are multiple situations that arise. However, two of those current problems are, government debt, and education. Statistics show that regardless if it is United States, Federal, State of Local government, the total amount of debt America is in is $18,150,614,147,00. Some of the reasons behind the debt would relate to healthcare programs, social security programs, and defense budget expenses. "A total of 940 billion USA was allocated to healthcare benefit programs, which includes the much talked about Medicare and Medicaid benefits program," (Investopedia). As for the social security program, it is "aimed at providing financial security to the retired pensioners of 65 plus by keeping them above the poverty

During the Great Depression and World War II many Americans delayed marrying and having children because of the poor economy. The number of marriages and births soared after the war. Many older couples who had delayed having children began having them when the war ended. This increase in births among both younger and older American couples created the Baby Boom Generation. This large group of people born in the U.S. from 1946 to 1964 amounted to 76 million children. Those born during this time make up approximately 36% of today’s population (Deutsch). What impact has this had on the economy? Read on to see how the baby boom generation has affected the economy and what will happen as they retire.

In the long term, the country should expect to see an improvement in the economy where unemployment levels decrease thus increasing short run aggregate supply (as shown in the diagram), putting the economy back at a place of full Employment . No doubt it will take time for the government to completely recover the economy or bring it as close to potential Gpd as possible, but the decrease in subsidies and cutback in health care benefits is more than necessary to achieve full employment. As the economy is nursed back to full potential prices continue to increase and aggregate demand begins to rise and business can now work in on building profits while workers can now enjoy less money taken out of their checks and more put back into their pockets. A decrease

While no major changes are planned to the system, several smaller changes may make a difference for hundreds of thousands of beneficiaries in this state. The biggest thing to pay attention to might be the general trend of fewer

From 1970 to the year 2000, the world's over-60 population is projected to increase by more than 90 percent" . This is an astonishing number, seeming how the total population was predicted to grow by less than 75 percent . "The most prominent feature of the looming shift in the composition of the working-age population is, of course, its increasing age" . It is hard to say what will happen when suddenly there will be an abundance of older people who are preparing to retire.

The demographic questions have occupied for a few years an important place in the great debates of economic policy, in France as well as in the principal industrialized countries. In other words, all the large industrialized countries will know a considerable ageing of the population during the next decades. In the academic circles and the business press, they believe that the ageing of the population will have important effects on the financial markets following the impact awaited on the rates of saving and the request of the fund's investments. To develop the subject, we will initially present the various studies made by certain authors to justify the common claims according to which the demographic factors probably