A day does not go by that I don’t read about how Social Security is one step closer to insolvency. As someone who is at the tail-end of the “Baby Boomer” generation (76 million were born 1946 – 1964), I’m concerned about how my retirement will be impacted by dwindling Social Security and Medicare dollars. Other government programs will be affected, too.
Over half of Millennials (51%) say they do not believe there will be any money for them in the Social Security system by the time they retire, and an additional 39% say the system will only be able to provide them with reduced retirement benefits. Just 6% expect to receive Social Security benefits at levels enjoyed by current retirees. (Millennials in Adulthood, Pew Research Center Study, March 7, 2014)
The government says officially that there is enough money to pay benefits at current levels until 2041. The Social Security Administration admits on its website that benefits will likely be reduced afterwards, barring changes that improve the system’s financial strength. Some critics say benefits could be at risk only two years, when Social Security cash flow turns negative. They claim that since the money paid in over the last few decades is part of the government's overall budget, it is available only on paper. In order to pay benefits through 2041, the government would have to borrow, they say.
This is very frightening. We should not rely solely on the government for retirement, but there are thousands of Baby Boomers who have paid into Social Security and Medicare whose retirement is based on that benefit. They firmly believe and expect that they will access those benefits.
Every day, thousands turn 65 years old. By the time every “Baby Boomer” is collecting Social Security and Medicare, those two programs will eat up about half of our entire federal budget, projections show. Economists predict both Social Security trust funds and one of Medicare’s trust funds will be broke.
Paul Taylor, Executive Vice President, Pew Research Center, agrees that Millennials are going to foot the bill of the Baby Boomers Social Security. “Social Security and Medicare systems, which, in the public's mind, have done brilliantly in doing what they set out to do, they were based on the demographics of the 20th century,” he said. “You had, literally, at the beginning, 150 workers per retiree, by the time all the baby boomers move into taking those programs, we'll only have two workers per retiree. The math of those programs does not work...”
Millennials, (80 million are now 18 – 32 years old) are the biggest generation since the Baby Boomers. They could be the first generation in modern American history to have a lower standard of living than their parents. Few Millennials believe that Social Security will provide them with full benefits when they are ready to retire, but most oppose cutting current benefits to fix the system, a recent Pew study finds.
Social Security and Medicare need to be meet the needs of both the “graying Tsumani” and the Millennials. But just how will the government bridge this gap to meet the needs of the two largest generations in this country’s history? Synching Social Security and Medicare to align with these two generations is an increasingly difficult challenge, and one that will be debated for a long time to come. Meaningful discussion should incorporate on how agile Intelligent Business Process Management (iBPM) technology can help.