BABY BOOMER RETIREMENT: THE NIGHTMARE IN OUR FUTURE
May 19, 2005
For those who believe that Social Security and Medicare are in sound ď¬?nancial shape for decades to come, the latest numbers from the Trustees of Social Security and Medicare present a sobering picture, says John C. Goodman, president of the National Center for Policy Analysis, in congressional testimony.
- In 2010, the federal government will need $127 billion in additional funds to pay promised beneď¬?ts.
- Five years later, the size of the annual deď¬?cit will double; five years beyond that, it will double again.
- In just 15 years, the federal government will have to raise taxes, reduce other spending or borrow $761 billion to keep its promises to America's senior citizens.
As the years pass, the size of the deď¬?cits will continue to grow. Without changes in worker payroll tax rates or senior citizen beneď¬?ts, the shortfall in Social Security and Medicare revenues compared to promised beneď¬?ts will top more than $2 trillion in 2030, $4 trillion in 2040 and $7 trillion in 2050!
These deď¬?cit numbers include projected inď¬‚ation. Yet even in 2004 dollars, the numbers are still staggering, says Goodman.
- Valued in today?s dollars, the annual Social Security deď¬?cit will top $50 billion in 2020, $250 billion in 2030 and $400 billion in 2050.
- Adding Medicare's deď¬?cits, the federal government will need more than $500 billion in 2020, $1 trillion in 2030 and $2 trillion in 2050 to fund elderly entitlement programs alone.
It is clear that future retirees will have to rely more on private savings than previous generations. For this reason, we need programs that encourage private sector saving while reducing future government entitlement obligations at the same time. This could be accomplished through personal retirement accounts, says Goodman.
Source: John C. Goodman, "Baby Boomer Retirement: The Nightmare in Our Future," National Center for Policy Analysis, Testimony Before the House Ways & Means Committee, May 19, 2005.
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