Essay - Baby Boomers and Retirement Introduction the Paper Explores the Effects...


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Baby Boomers and Retirement

Introduction

***** paper explores the effects of the retiring baby boomer generation on Gross Domestic Product (GDP), one of the most widely accepted measures of economic growth. Two major components of GDP, consumption and government spending, will be significantly impacted by future government policies regarding retirement *****nefits, most notably Social Security ***** Medicare. With both these components in m*****d, the paper recommends those policies that are ***** likely to maximize GDP.

The GDP-Related Challenges of Baby ***** and Retirement

Changing demographics are straining Social Security resources. At ***** end of World War II, there were 44 workers paying ***** Security taxes for every retiree collecting from the program (The first ***** boomer collects Social *****, 2007). Now, the ratio is just three workers ***** every one reitiree and *****s will soon outnumber workers. According to ***** Council of Economic Adv*****ors chartered with providing objective economic analysis ***** advice on the development and implementation domestic ***** international economic policies, Social Security ***** begin to incur annual operating losses in 2018, when its outlays first exceed its tax revenues (CEA memo on Social Security). To cover the shortfall and to "stay open," Social Security will use up its Trust Fund (or draw down ***** bank account) ***** 2018 to 2042. Beg*****ning in *****, the Social Security Trust ***** will be bankrupt because ***** resources available to the system (payroll *****es plus income taxes ***** Social ***** benefits), will be insufficient ***** cover the liabilities of the system (benefits scheduled for retirees, people with disabilities, and other beneficiaries). If nothing is d***** to add to Social Security *****, benefit payments would have to be reduced by roughly 27 percent.

Like Social *****, Medic***** resources ***** become strained as aging baby boomers grow in number. A study by the Centers for Medicare and Medicaid Services reveals that Medicare spending ***** expected to grow to $8***** billion in 2017, up from $427 billion in 2007 (Zhang, 2008). The study also shows that there also will be a shift *****ward the private arm of Medicare, which tends to cost the government more. By 2017, 27.5 ***** of eligible Medicare enrollees are expected to enroll in managed-care plans, compared with 16.4 percent in 2006.

Often overlooked in overall discussions of retirement ***** is that ***** ***** population will also negatively impact another very important component of GDP, consumption, in the not too distant *****. Personal consumption, at 70 percent, is the largest ***** of GDP (Facts on policy: Consumer Spending). The aging of the baby boom gener*****ion will affect the ability of many retailers to grow and prosper (Retailing 2015: New frontiers). ***** most rapidly growing age segment in the United States is the 55+ segment. By 2015, lead*****g-edge ***** boomers will be approaching ***** 70, a lifestage when spending on ***** goods and services such as soft***** and homegoods and c*****sumables begins to decline. In fact, the only category ***** to experience an incre*****e in spending will be healthcare.

Possible Solutions

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