More Americans are retiring than ever before. See what that means for you.
"America’s aging population is reshaping the workforce, with far-reaching economic consequences
The ranks of retirees are growing much faster today than the number of new workers, ushering in an unprecedented graying of America that will reshape our workforce and economy.
For the past 50 years, the baby-boomer generation, born between 1946 and 1964, have worked through the American labor force like a big meal inside an anaconda. As they age, the workforce is becoming older than ever. As they retire, they’ll push the worker-to-retiree ratio lower than ever.
Lower numbers of workers per retiree threaten the future of programs such as Social Security and Medicare, which support older Americans by taxing current workers. As the share of working Americans shrinks, that source of money will too. Both programs face funding shortfalls in the next decade without higher taxes or cuts to benefits.
It’s not that younger people are less willing to work. They just make up a smaller share of the population than boomers did at the same age. Boomers tended to have fewer children than their parents — a trend that has continued with each generation since — so there aren’t enough Gen Xers and millennials to balance out the growing numbers of retirees. Research suggests this demographic shift brings down economic growth.
How baby boomers broke the population pyramid
The boomers’ exit from the workforce has been cushioned by a shift toward working later in life. More Americans are working into their 60s and 70s because oflonger life spans, financial incentives to retire later, and the need to make ends meet. The trend was reversed briefly in the covid-19 pandemic, but that wave of early retirees has largely returned to work.
As a result, the workforce itself is now older than ever. In 1984, people under 40 made up more than 60 percent of the workforce. That’s fallen to 45 percent today. Over that same period, workers over 60 have become twice as common.
Note: Totals may not equal 100 because of rounding.
The growing numbers of retirees create a heightened demand for health-care services. The industry is expected to create more jobs than any other over this decade. But care shortages already exist and are likely to get worse as the number of people needing care increases and the number of available caregivers stagnates or shrinks.
The cost of long-term care in an aging society “keeps me up at night,” said Stanford economist Gopi Shah Goda.
“Long-term care is one of the biggest expenditure risks that faces the elderly population,” Goda said. Because services like long-term home health care typically aren’t covered by Medicare or other health insurance, she said, “people impoverish themselves paying for long-term care until they’re eligible for Medicaid, which does cover long-term care services.”
If older Americans aren’t able to afford or find care, their needs often fall to relatives. About 1 in 5 U.S. adults already provide ongoing support to close friends or family members, according to a 2021 KFF poll. While many find purpose and meaning in caregiving, this informal and unpaid work can lead to financial strain, health problems and leaving the workforce.
Preparing for a grayer future will require lawmakers to come to agreements on contentious issues like immigration and entitlement programs that have been at a standstill in Congress for years.
“It’s a hydra of a numbers problem,” said economist Kathryn Anne Edwards. “And we’re not trying to handle any of those heads.”
More immigrants would fill out the ranks of working-age Americans and slow the nation’s aging. Immigrants are younger than Americans on average and already the main contributor to the country’s population growth.
Greater immigration also leads to better outcomes for people who rely on long-term care, according to research from the Cato Institute and the National Bureau of Economic Research. But the last major immigration bill was passed in 1986, and the issue appears to be at a point of political stasis.
Starting in 2033, Social Security won’t be able to make full retirement payments unless Congress intervenes. But the program has not been updated legislatively for 40 years. To fend off insolvency, lawmakers face the choice of reducing benefit payments, increasing the retirement age or raising taxes.
“We’ve known for 75 years now that we had a really large birth cohort,” Edwards said. “Many of the quote-unquote problems related to that aren’t from their numbers. It’s problems that come from us not making policy to address what those numbers would mean.”