In 2030, America will experience a demographic turning point when all baby boomers will be older than 65. That will equal one out of five Americans. Also importantly, by 2034, those older than 65 are expected to outnumber children for the first time in U.S. history.

Source: America’s age tipping point is approaching — we’re totally unprepared

Much of the article talks about the “aging” of America without explaining what is occurring. Only in the 2nd to the last paragraph is the root cause mentioned:

Given America’s demographics, including sustained levels of below replacement fertility and increasing proportions in those over the age of 65, a return to the younger demographic age structures of the recent past is simply not in the cards.  

Paul Erlich’s The Population Bomb was published in 1968. It was out of date by 1972 when the U.S. fertility rate was dropping below 2.1. This book influenced at least two generations into thinking our population growth rate was still out of control in 2022.

Now we are racing full speed into a near future where the government has promised benefits based on what turned into a pay as you go system (Medicare, Social Security) that will have insufficient funds, and where many have chosen not to save funds for retirement years.

What will happen next?

  • Watch for an increase in the cap on Social Security taxes on wages
  • SS and Medicare were supposed to be pre-paid retirement funds that you draw from when you retire. But, they morphed into “pay as we go” plans that take incoming SS taxes to directly fund current benefits. Adequate funds were not set aside. Watch for Social Security benefits to become “means tested” (Medicare already is – you pay Medicare insurance premiums proportional to our income).
  • There are threats to reduce benefits but that is politically impossible, particularly as the largest voting block will be older people with a shrinking younger population.
  • The “age 65” retirement age has been age 67 for those born after 1960, for decades. This may be lifted to age 70. A higher age encourages more years of work and more contributions to Social Security and Medicare.
  • Watch for increased taxes, particularly redistribution taxes that will tax those who did the right thing and saved for retirement and give those funds to those who did not
  • Wealth taxes are perennial favorite idea but the real-world experience (3 countries have wealth taxes and 3 have limited wealth taxes) is they did not accomplish what was expected. We already have wealth taxes – they are called estate and inheritance taxes – and inflation. Inflation is a wealth tax on everyone as it devalues one’s wealth.