Ready or not, here come the boomers
On Monday, the first of the WWII baby boomers filed for her Social Security benefits. Kathleen Casey-Kirschling, born one second after midnight in January 1946, filed for early retirement, the first of an estimated 80 million "boomers" who will be retiring in the coming years.Her retirement, held at the National Press Club, was a national media event, with Social Security Commissioner Michael J. Astrue in attendance. Shortly after her announcement, the "chickens have come home to roost" speeches began with dire predictions for Social Security and Medicare.
David Walker, the comptroller general of the Government Accountability Office, Congress' legislative arm, warned the Social Security system will soon have more recipients coming than it can afford to pay out. Walker said that we have gone from 16 workers paying into Social Security for every person drawing benefits in 1950 to 3.3 to one today, and the number will drop to two to one by the time the boomers retire in big numbers.
Former Minnesota Democratic Rep. Tim Penny predicts that within 10 years, the government will not be collecting enough payroll taxes to pay Social Security benefits. Under the law, the trust fund for Social Security is solvent until 2041, but there's a problem. The government that has been collecting the payroll taxes and matching employer contributions has been spending it on other things and leaving an IOU in the trust fund.
The loan is expected to be called in 2017, when the largest bloc of the boomers -- those born between 1946 and 1964 -- will be retiring. By the mid 2020s, the federal government will have to fork over more than $200 billion a year, and then it climbs to more than $300 billion a year.
That money will have to come from somewhere, so either all federal spending -- from education to defense to the environment -- will need to be cut, or beneficiaries will not be paid.
There have been many plans floated to fix this problem, and precious little has been done. Increased life expectancies have only added to the problem. Someday, the jig will be up. Let's hope this first boomer retirement is the wake-up call needed to jar someone into action.