THE RETIREMENT "MONSTER"
May 25, 2006
Taxpayers owe more than a half-million dollars per household for financial promises made by government, mostly to cover the cost of retirement benefits for baby boomers, a USA Today analysis shows.
- Federal, state and local governments have added nearly $10 trillion to taxpayer liabilities in the past two years, bringing the total of government's unfunded obligations to an unprecedented $57.8 trillion.
- That is the equivalent of a $510,678 credit card debt for every American household. Payments on this delinquent tax bill must start soon if financial promises to the elderly are to be kept.
- The cost of retirement programs will start to soar when baby boomers -- 79 million born between 1946 and 1964 -- begin collecting Social Security in 2008 and Medicare in 2011.
What's behind the increase?
- Medicare -- the health care program for the elderly saw its long-term deficit grow $4.5 trillion from 2004. The causes include higher medical costs and an aging population. However, the new Medicare prescription drug benefit is not a factor. It was included in the 2004 number.
- Social Security -- The program's deficit for workers and beneficiaries already in the system grew $2.5 trillion over two years because each generation gets benefits greater than the last, so the program automatically gets more out of balance every year.
- Government retirement benefits -- Pension and retiree medical benefits for civil servants and military personnel are more generous than those for private-sector workers. But government has not set aside as much money as private companies to pay the costs.
Source: Dennis Cauchon, "Retiree benefits grow into 'monster,' " USA Today, May 25, 2006.
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