Social InSecurity

From boom to bust: the silver generation that could leave Uncle Sam broke

James Bone in New York
A retired New Jersey schoolteacher has become the first American baby boomer to apply for her government pension as the ageing nation braces for a “silver tsunami” that threatens to bankrupt its social security system.
Kathleen Casey-Kirschling was born one second after midnight on January 1, 1946, at the leading edge of the baby boom of almost 80 million people between the end of the Second World War and 1964.
Others born in 1946 include President Bush and his wife, Laura, and President Clinton, whose wife, Hillary, was born the following year.
“I think I’m just lucky to be at the top of the boom,” Mrs Casey-Kirschling said. “I’m blessed to be able to take my Social Security now.”
With 10,000 people a day due to apply for their pensions over the next 20 years, the social security system is due to go bust in 2041 unless it is fixed.
The problem is demographic: the current number of 37 million Americans over the age of 65 is due to double to nearly 80 million by 2045, while the size of the workforce is expected to increase by only 20 per cent.
At the end of the Second World War, a decade after Social Security was created, there were 42 workers paying into the system for every retired person receiving a pension.
Now there are just three, and by 2030 there will only be two – so that every working couple will effectively have their own retired person to support.
“The numbers don’t add up,” said Robert Bixby of the nonpartisan Concord Coalition, who has made dozens of joint appearances with analysts from the Left and Right on a ‘Fiscal Wake-Up Tour’ across America over the last two years.
“It doesn’t matter if you’re liberal or conservative, Republican or Democrat, the numbers are unsustainable. For the sake of our country’s future, and particularly the young people, it’s really important to get this under control. Politicians on the Left and Right are ducking the issue,” he said.
The social security system is sometimes called the “third rail” of American politics because touching it can lead to political death.
President Bush made Social Security reform a top priority of his second term but his proposal to create private investment accounts was blocked in Congress.
Michael Astrue, the Social Security commissioner, has warned of a “silver tsunami” that could swamp the system.
This week, however, he sounded optimistic that the problem would be fixed by Congress, although not until after next year’s presidential election.
“There’s no totally politically easy choice,” he said. “I’m not pushing any one answer.”
Mrs Casey-Kirschling became a symbol of her generation when she was identified as the first baby boomer by Money magazine on the eve of her 40th birthday in 1985.
After teaching nutrition to 12-year-olds at a school in Camden, New Jersey, for 14 years, she retired and volunteered for the Red Cross to help victims of Hurricane Katrina.
She moved recently with her husband, a university professor, to their summer home on Maryland’s Bohemia river, near Chesapeake Bay, where they keep a 42ft boat named First Boomer.
Like all Americans she became eligible to apply for her government pension three months before her 62nd birthday.
By taking her pension at the first opportunity she will receive only three-quarters of the amount she would have got if she had waited four more years – or about $280 a month (£140) less.
As reporters looked on, Mrs Casey-Kirschling signed up at the National Press Club in Washington on Monday on a website set up by the Government to deal with the impending flood of pension applications. Her husband plans to apply in June.
She said that she thought, despite the political deadlock, the looming social security shortfall would be addressed. “I think the baby boomers will want to get this fixed,” she said. “They’re going to want to take care of their children and their grandchildren.”
Baby bulge
— When US soldiers returned after the Second World War babies were conceived at a rate of one every eight seconds
— 76 million babies were born between 1946 and 1964. These baby boomers currently make up one third of the US population
— By the time the first boomers went to school they had each watched about 5,000 hours of Howdy Doody, The Mickey Mouse Club, and The Lone Ranger
— They witnessed the birth of rock and roll in 1951, John F. Kennedy’s assassination in 1963, the space race, the Cold War, the civil rights movement and the end of the Vietnam War in 1975
— Baby boomers achieved a higher level of education than any generation before them. 88.8 per cent completed high school and 28.5 per cent have a degree
— In 1994 baby boomers aged between 45 and 50 had a median income 66 per cent higher than that of their parents’ generation