Baby-Boom Bomb
World War 2 ended nearly 67 years ago, after which a large increase in the annual birthrate occurred world-wide for over 10 years, often called the post war baby boom. In the Us alone there are about 77 million "Baby Boomers" fluctuating from 55 to 66 years of age. They are currently in their top revenue earning and tax paying years, but the economic teeter-totter in our community is about to tip in a negative way.
Baby-Boom Bomb
This large group of economic contributors is starting to retire and become a large net liability, rather than a large net asset, in a blend manner; because they will not only stop paying into the tax receipts of government, they will also begin receiving tax revenue from government in the form of group protection and Medicare. This blend swap in increased costs and decreased revenue to government is a demographic bomb that will likely collapse our economy; and any ensuing fights over these entitlements could destroy our society.
The ongoing reduction in our workforce, along with downward pressure on wages, is all eroding taxable income, which reduces government income, which will at last sell out government payouts over the board. It is a common event for both blue-collar and white-collar employees, that when employees like the "Boomers" retire today, their replacements are promoted into their jobs at lower pay and fewer perks or benefits. As a nation we are becoming poorer, not richer; because our potential as a community to take care of each other is declining and will finally become every someone for themselves with no form of assurance or government aide as a protection net.
The "Boomers" as a large group of citizens started entering the workforce in the mid-1960's and have paid into group Security, Medicare and Medicaid their whole careers; now that they are starting to retire, community is saying we cannot afford to maintain you like you supported your parents and grandparents. There is plenty of wealth, but we are not going to turn how it is apportioned; you will just have to make do with less and less.
There is much to fear about the economic condition of "Boomers"; there is more than a trillion owed to them as pensions that are unfunded and uncollectible corporate liabilities. Many "Boomers" are cashing in their 401K's and Ira's because they have lost their jobs and are for all intents and purposes unemployable; while others are working at low paying jobs and have taken out loans against their relinquishment savings and investments, leaving them vulnerable to even greater economic hardship in the future. The government has caused group protection to begin running deficits, just when the "Boomer" citizen began retiring, because they chose to lower the Fica tax that funds group protection and Medicare, rather than lower revenue tax or advance and increase Fica tax on incomes above 0,000 per year that would make it a fairer tax as well as bring in revenue.
Considering that the average 401K is only worth ,000 and that pensions can, and many have, disappeared straight through corporate takeovers and corporate bankruptcies. The retiring "Boomers" will not be the consumers and economic force that they have been since the 1970's. The arrival drag on Federal Medicare programs, state Medicaid programs and state welfare programs is going to consume most government liquidity and cause massive increases in government debt besides.
The alternative is to sell out services and abandon everybody to less or none of curative services, group services, education, police and fire protection, and less food and goods for consumption. In a crumbling infra-structure we cannot remain a superpower or even a first-world country when the "Boomer" bomb explodes; we will become a very internally stressed third-world country.
The massive debts of our Federal Government, states, counties, cities, corporations, pension funds, pupil loans, real estate debt, and personal prestige card debt, are all dominoes that will collapse each other as soon as any one of them defaults; and the loss of cash flow from retiring "Boomers" is sure to ensue in defaults in a few of these debt obligations; remember, by law, debts have first feeding at the trough; budgets are cut, services are eliminated, revenue is reduced, all to pay past debts.
Our government is not capable of dealing with the "Boomer" bomb; it naturally is too divisive in its political rhetoric to strive for the group equality essential to deal with the arrival avalanche of group problems arising from reduced revenue and addition debt. Nor will Congress be able to act swift adequate when group declension erupts into greatest group disobedience. Government has already failed; the bus has already driven off the cliff and is starting a free-fall to destruction. Just because we can respond the question, "how is it going?" by replying, "so far so good", does not belie our sure fate.
With 77 million "Boomers" reaching relinquishment age over the next ten years, gives an average of more than 20,000 "Boomers" per day, 365 days per year. It is estimated that only about 10,000 citizen per day are surely retiring, because 10,000 citizen per day cannot afford to retire. This is tragic and likely to get worse because real estate is not recovering, savings are not compensated with interest, inflation is eroding the dollar's purchasing power, and group and curative services are being cut as well as going continually higher in costs. The government protection nets at all levels of our community are being shredded at the same time that poverty and destitution are increasing. The equity wealth related with stocks and bonds, real estate, recreational toys, antiques, collectables of every kind, will decline over the board because there will be many more sellers than buyers. Even though the Federal maintain continually indicates its willingness to buy Wall street equities for cash, that cash will be exchanged for goods and services whose prices will rise faster that the Federal maintain can furnish cash.
The fuse was lit on this bomb at the end of the baby boom, colse to 1956; it started exploding in 2011; and though it appears to be an explosion in slow motion; it will be relentless in addition costs and decreasing contributions to our cheaper that will devastate and paralyze state and federal government. Right now 600,000 citizen per month are reaching relinquishment age and 300,000 citizen per month are surely retiring, which dwarfs employment statistics such as changes in unemployment monthly. With 3.5 to 4-million citizen retiring in 2012 means that millions are delaying their relinquishment for a few years; which will become 10 to 12-million new retirees per year in just a few years, because those that are delaying their relinquishment now will soon be forced out of the workforce by the effects of declining condition related with aging and reduced state and federal government curative benefits available to shore up that declining health.
How many citizen being hired in today's Us cheaper (February 2012) are just replacing retiring "Boomers" and are not part of economic expansion? You cannot look at employment statistics only from the point of how many unemployed citizen have been rehired into the workforce over a specific time period, until you subtract out the number of citizen retiring in that same time period. Just replacing the "Boomers" in the workforce will generate 70-million jobs over 10-years without addition the cheaper or addition government income.
Just to throw colse to a few cost numbers; in a few years when 10-million "Boomers" are retiring each year, they will stop contributing roughly 20 billion dollars per year into group protection and Medicare; and they will start withdrawing at least 120-billion dollars per year in group protection alone and many billions per year more in Medicare expenditures. This loss of revenue and increase in costs will be colse to 200-billion dollars per year in increased government debt and it will grow by 200-billion dollars per year for a few years until the "Boomers" are all retired and adding at least 1-trillion dollars per year in costs to government that we do not have at this time; and all of this will occur before 2020. Will we continue to have group entitlements? Certainly, as long as you are breathing you are socially entitled to your fate.
© February 2012
Craig D. Hanks
Eugene. Oregon
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