Editor's Note: I am publishing a multi-part series focused on Baby Boomers and social insurance, the frequently maligned and misunderstood federal entitlement programs. This series delineates arguments, pro and con, concerning the fiscal impact of population aging and social insurance. Can we expect secure and sustainable Social Security and Medicare programs? Can our children and grandchildren? Please bookmark this blog and return periodically for subsequent installments. Weigh in with your opinions in the comments section. Thanks.
Two narratives compete for public consciousness about population aging.The Generational Tempest Narrative portends doom-and-gloom when the costs of social insurance for aging populations overwhelm government tax revenue, with older generations committing the sin of fiscal child abuse on the youngest and unborn generations.
The Transformation Narrative points to economic expansion because of the creative and unexpected ways that today’s oldest generations have historically changed business and society. Science, technology, and social action will advance economies that embrace the opportunities rather than the problems of aging.
One hot, humid evening in the college town of Lawrence, Kansas, I threw on some cut-off blue jeans, an old T-shirt covered with tear holes and some beat-up track shoes from my high school days. I charged out of my house with nary a care in the world and fell into a graceful jogging pace through Victorian neighborhoods near the university. As the sun crept below the western horizon, thus darkening tree-lined streets, flashing red lights blinked off the walls of houses ahead of me.
Peering over my shoulder I saw a police car, and the officer gestured for me to stop running. A rotund, middle-aged man exited the squad car and approached me with a disapproving glare. “What are you doing out here?” he demanded.
He furrowed his eyebrows. “Jogging? What are you running from?”
This was a time of extraordinary student disobedience on campus, and I’m sure part of this officer’s motivations to challenge me included my youthfulness, longer hair, and swagger.
Scanning his massive girth, I thought for a moment and finally said, “Heart disease.”
This police officer could not have fathomed that someday soon he would drive through that same quaint neighborhood and see dozens of runners, men and women alike. He clearly did not believe in the longevity advantages of an aerobic fitness regimen, and he couldn’t have imagined the investment potential swirling around a little Seattle company then known as Nike. He was mentally light years away from an intuitive insight that Baby Boomers were about to turn running into a faddish recreational pursuit. Fortunes were about to be made; jogging would soon become part of mainstream value consensus. He didn’t understand my generation. He didn’t recognize that my generation transforms society, culture, institutions, and businesses.
The sociological forces colliding 40+ years ago are taking on a new form: a generation confronting marginalizing thought leaders committed to diminishing a generation in its aging while overlooking its constructive potential to change society and commerce once again — our encore transformation.
ELDER DOOM AND GLOOM
Some experts feel they have clear vision about what’s going to happen when Baby Boomers accept Social Security and Medicare en masse. Pundits predict a horrific fiscal meltdown and assume the future will bring declining economic viability, GDP productivity, and international US standing as the world’s largest economy. They hold to their views based on something new from "the dismal science" called generational accounting and imbue this mystical process with justifications that are inaccessible to all but a few. We can think of this as the Generational Tempest Narrative: economies overwhelmed by hurricane-force indebtedness: unfunded liabilities for social insurance accruing as 10,000 Baby Boomers turn 65 every day for the next sixteen years.
I am not an economist, but I have been in the business world for over thirty-five years. My daily focus has been the competitive marketplace where companies vie for market share and profit margins, where forces of free-enterprise govern, where economic adversity begets new industries, and where competition creates innovation.
I have faith in the transformative powers of business and technology, adapted for and adopted by a generation. I have seen industries rise up against formidable obstacles, transform those obstacles into opportunities, and create entirely new paradigms. (Thus my film camera became digital without losing any of the visual information in film.) I have seen small companies disrupt complacency of industry giants; many times I have watched David slay Goliath. Thus hippie-haven Microsoft trounced the conventional blue suits at IBM.
Further, I have seen Baby Boomers challenge business norms and contemporary thinking at each life stage. They have fueled company and product creation with their fads, fashions, foibles, and refusals to accept past as prologue.
Their numbers and shared values around evolving consumer choices have grown multinational firms such as Microsoft, Apple, McDonald’s, Honda, Harley-Davidson, Starbucks, and Recreational Equipment Inc. They’ve transformed outlying bohemian villages into tony places such as Telluride and Santa Fe. They’ve ignited investment markets with their mutual funds, 401(k)’s, and online portfolios. They've created wealth, driving the American economy forward with greater momentum than any prior generation.
When innovation collides with this generation, always ready for reinvention and redefinition, fortunes are made, markets are redefined, and once-intractable social problems become mitigated.
The same forces that have ruled the consumer marketplace for five decades will dramatically change our understanding of retirement, social insurance, and the future of aging. I believe that promises and securities embedded in social insurance will foster these forces rather than inhibit them.
FOUNDATION OF THE FUTURE
Social insurance is the foundation of a hopeful old age. This is patently obvious for those generations currently benefiting most from payroll deductions: the GI Generation (b. 1900 through 1924) and the Silent Generation (b. 1925 through 1945).
Social insurance programs release millions from jobless poverty or burdens of low-paying subsistence jobs that rob time, pay little, and add almost nothing to societal progress.
Entitlement programs are not just “social insurance,” they provide the gift of security in a free society undergoing a longevity revolution. Even though the average monthly Social Security benefit of $1,045.00 is nominal income, the program is nevertheless responsible for providing 22 percent or post-retirement income for married couples and 43 percent for single retirees, a meaningful and significant shelter against poverty — and national disgrace. For about 66 percent of retirees over 65, Social Security represents more than half their income.
These programs free up the wisest citizens, giving them greater opportunities to contemplate and then act on solutions to myriad problems confronting Western nations. Social insurance can give aging adults more of a chance to actualize, to give back, and to create. And like other forms of insurance, these programs exist to fill a need in a time of personal crises, such as chronic unemployment or illnesses. If life does not become difficult with aging, social insurance can be forestalled or not even fully utilized. A healthy body does not need much healthcare, other than preventative maintenance, and a productive worker with a paycheck does not need Social Security, or not as much.
One in five American adults will be over 65 in a little over sixteen years. These bonus years are also a bonus for a nation confronting problems demanding greater maturation, accumulated life experiences, and a longer view. Wise elders can help lead humanity to a state of greater self-awareness, peaceful coexistence, and economic progress for all nations.
Where some vocal academicians and politicians predict catastrophe, I see unparalleled opportunity with bonus years being granted to the Baby Boomer generation. I believe miracles can happen in the marketplace. Unexpected innovations could even substantially reduce debts that generational accountants and economists believe inevitable.
Boomers have built new industries; they’ve reinvented old industries; they’ve fueled decades of economic vitality, in spite of recessions and slowdowns that crop up periodically. Most are not ready to rest or retire. According to one study by MetLife Mature Market Institute, 83 percent of the Boomer Generation wish to leave a legacy.
To fulfill age potential of a generation, its members need the same insurance in old age that leaders from three generations earlier foresaw as fundamental to social progress in an aging, socially progressive, modern nation.
NEXT: MAKING OF A BOOMER CULTURE IN AGING