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More than 10,000 people in the U.S. turn 65 every day, and that number will peak at about 12,000 in the summer of 2024. As more baby boomers hit that traditional retirement age, this demographic bubble will affect everything from healthcare and politics to the composition of the workforce to the future of Social Security and Medicare.
“It’s a demographic blip in some ways, but it has huge implications on our society and how it operates,” said Gal Wettstein, senior research economist at the Center for Retirement Research at Boston College.
Social Security, which is funded by workers paying into the system, is one program that is expected to come under strain. “The problem with the funding has been known for some time,” Wettstein said. “It’s not a surprise. But there’s been neglect of the problem.”
There’s a term for the moment when the largest number of people ever will reach traditional retirement age in the U.S. — “Peak 65.” It will happen in 2024, most likely in the summer, when there are more birthdays.
Jason Fichtner, who heads the Retirement Income Institute at the nonprofit Alliance for Lifetime Income and also serves as chief economist at the Bipartisan Policy Center, wrote about Peak 65 in a 2021 white paper for the alliance. Fichtner said it’s important to think in two ways about the fiscal stress that will be created by an aging population.
“Aging from above results in changes in social expenditures,” he said. “This is going to lead to increases in health expenditures, increases in pension expenditures and decreases in education expenditures. Aging from below leads to changes in revenues as workers decline relative to the total population.”
Will Social Security be there for retirees?
Social Security’s combined trust funds will be depleted in 2034, at which time only 80% of benefits will be paid. In this year’s State of the Union address, President Joe Biden vowed to protect Social Security and Medicare.
Read: Social Security is now projected to be unable to pay full benefits a year earlier than expected
Lawmakers have also made various proposals for shoring up Social Security, for example by raising taxes on the very rich or creating a special sovereign-wealth fund, but none of those proposals has gotten much traction.
“Social Security is already under a lot of pressure. Although 65 isn’t the full retirement age anymore, people ages 62 to 70 are taking up Social Security for the first time, putting more and more pressure on that system,” said Joanna Lahey, a professor in the Bush School of Government and Public Service at Texas A&M University.
For baby boomers, full retirement age is somewhere between 66 years and 66 years, 10 months. For anyone born in 1960 or later, that age is 67. People can start collecting reduced benefits at age 62.
“Government programs like Social Security may need to start using general revenues rather than being self-financed, something that would have been unthinkable even five to 10 years ago,” Lahey said, adding that baby boomers are also likely to need to continue working longer to supplement their Social Security income.
The impact of boomers hitting retirement age hasn’t been a secret, but with every passing year, the situation gets more dire for the average boomer, said Teresa Ghilarducci, a professor of economics at the New School.
“Each year, the typical member of the new group of 65 years has less retirement-income security. Wave upon wave of people at that age have less retirement wealth, less-secure forms of retirement wealth and less Social Security because of the cuts in benefits that started in 1983,” Ghilarducci said.
“Financially insecure elders will increasingly seek part- and full-time work, which means more people competing for jobs, which puts downward pressure on wages and working conditions,” she noted. “We are already seeing some low-paying industries depending on low-paid older workers, [such as] home- and personal-care occupations and janitorial services,” Ghilarducci said.
Along with modernizing the retirement system, the U.S. needs to strengthen its safety net as the share of the population that is older continues to grow, noted Catherine Collinson, the chief executive and president of Transamerica Institute, a private research and educational foundation that runs the Transamerica Center for Retirement Studies. “It necessitates new solutions for affordable housing, aging in place and long-term-care services and supports, so that all Americans can live their final years with dignity and peace of mind,” she said.
Boomers still have political strength
Lahey said she expects to see a lot of workplace and technological innovation that focuses on helping older workers continue to be productive.
“I believe we’re already seeing these kinds of innovations, for example, in healthcare, with machines that assist nurses to lift patients. The move to flexible work is also something that older workers say they want as they bridge to retirement, and something we have been seeing more of,” she said.
Experts agree that the baby-boom generation hasn’t lost its power to change things.
From the time the first boomers were born, they have made their presence felt both politically and culturally. “That will continue and possibly even grow as they retire and have more time to vote and do political activism,” Lahey said.
And because this group makes up a massive voting bloc, politicians will spend more energy on topics focused on people 65 and older, Wettstein said.
Collinson said the same. “Baby boomers have reimagined and rewritten societal rules at every stage in life, and they are blazing a trail in older age by working beyond traditional retirement age with expectations of a flexible transition before fully retiring — which is a crucial part of the solution,” she said.
“Societally, we need Baby Boomers to keep driving positive change to help pave the way for future generations. They have strength in numbers, voting power and a voice.”
Opinion: If they come for Social Security and your retirement accounts, this is how they will do it
