March 19, 2015
Asia Times

Being Old In 2040 Will Be No Fun

by Martin Hutchinson

. . . In 2030, when the early baby boomers are mostly still with us, politicians will still be pushing problems off into the future as far as possible, in order to avoid the wrath of geriatric voters. Taxes will have risen, savings will have been decimated, but with the application of copious short-term remedies, the problem will still not be in its acute stage.

By 2040, however, with the first half of the baby boomer cohort departed, Nemesis will have arrived. The social security trust fund will have run out, leading to sharp cuts in payouts to retirees. The comforting idea that because we will be richer by then, a 25% (or whatever) cut in benefits will still leave recipients better off than today's retirees, will prove to have been rubbish.

With excessive regulation, government bloat and funny money, productivity growth in the US is running at unprecedentedly low levels (and in Britain has even been negative since 2007). Thus wages in 2033 will not be much higher than today, and the cut in benefits will bite hard.

What's worse, the voters of that day will see Medicare and other old-age costs apparently rising inexorably over several decades, both absorbing hefty tax increases and making US debt soar to dangerous levels at which its repayment is doubtful.

Round about 2040, a debt crisis will occur - at which point the obvious solution will be to cut back drastically the benefits available to old people, who are no longer producing incomes that can be taxed in order to repay debt, and who collectively bear much of the guilt for the parlous US fiscal position.

The Millennials and their successors will blame the old for their predicament and relative poverty, and they will have a substantial amount of reason on their side. Their revenge will be severe, and the old folk of 2040, those born between say 1955 and 1975, will see themselves reduced to a penury reminiscent of the British old of 1965 or the American old of 1895. . . .

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