Future of Entitlements: Toward A Positive Perspective

 

Seedtime for the Aging of a Generation

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 the Victorian neighborhoods near the university. As the sun crept below the western horizon, thus darkening the tree-lined streets, reflected red lights blinked off the walls of the 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.

“Jogging.”

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 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. The forces colliding 40+ years ago that I describe above are taking on a new form: a generation confronting the marginalizing forces committed to diminishing a generation in its aging while overlooking its constructive potential to transform society and commerce.

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, productivity and international standing. 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.

I am not an economist, but I have been in the business world for over thirty years. My daily focus has been the competitive marketplace where companies vie for market share and profitable margins, where the forces of free-enterprise govern, where 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 the complacency of industry giants; many times I have watched David slay Goliath. (Thus, hippie-haven Microsoft trounced the straight 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 the past as prologue.

Their numbers and collective mentalities around consumer choices have grown multinational firms such as Microsoft, Apple, McDonald’s, Honda, Harley-Davidson, Starbuck's and REI. They’ve transformed outlying bohemian villages into tony places such as Aspen 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 with greater economic resources 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 virtually ruled the consumer marketplace for five decades will dramatically change our understanding of retirement, entitlements and the future of aging.

I believe that the promises and securities embedded in social insurance will foster these forces, rather than inhibit them.

Foundation of the Future

Entitlements are the foundation of a hopeful old age. This is patently obvious for those generations currently benefiting most from payroll deductions: the GI Generation and the Silent Generation.

Social insurance programs release millions from jobless poverty or the 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, the program is nevertheless responsible for providing 40% of post-retirement income, a meaningful and significant shelter against poverty — and national disgrace. For about 66% of retirees over 65, Social Security represents more than half their income.

These programs free up society’s wisest, giving them greater opportunities to contemplate and then act on solutions to this nation’s myriad problems. 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 crisis, such as chronic unemployment or illnesses. If life does not become difficult with aging, the insurance can be forestalled or not even fully utilized. A healthy body does not need much healthcare, other than preventative care, 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 twenty 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 the 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 believe inevitable.

Boomers have built new industries; they’ve reinvented old industries; they’ve fueled decades of economic vitality, in spite of short-term recessions and economic slowdowns that crop up periodically. Most are not ready to rest or retire; they want to leave behind a legacy not a liability.

To fulfill the potential of a generation, its members need the same insurance in old age that leaders three generations earlier foresaw as fundamental to social progress in an aging, socially progressive, modern nation.

Making of a Boomer Culture in Aging

Expecting Boomers in their aging to do what they’ve always done — transform the fundamentals of American society and commerce — is only half the equation. We must adapt the American experience to a rapidly aging population — a society where the old outnumber the young.

Laura L. Carstensen, Ph.D., Director of the Stanford Center on Longevity, has recognized what will be needed and issued a challenge. “Myths and gaps in our culture’s understanding of older people, as well as widespread misconceptions about old age, further hinder the flowering of a culture in which people age well.” To this I add: myths and gaps in our cultural understanding and comprehensive appreciation of the potential of the soon-to-be-dominant aging generation, the Baby Boomers, further inhibit our society’s capacity to transform the aging problem into one of this nation's greatest opportunities for psychological, cultural, technological and scientific advancement.

“What we have to do today,” adds Carstensen, “is re-engineer society so that it supports satisfying, independent and healthy lives for older people.” Fundamental to re-engineering society is firing retirement, which Carstensen views as a 20th century invention. Critical to changing our conceptions about work after 65 is the extent to which we can modify social attitudes about the value of older workers, while changing regressive taxes and retirement laws, and changing how professions address participation by older workers.

Yes, changes may be needed to the entitlement programs conceived in another era. But along with changes to the basic conceptions of social insurance must also come fundamental changes to the nation’s overall health-care system; new social norms for healthy and productive aging; appreciation of the contributions possible from an empowered and motivated population of wise elders; and an economic system that values aging workers, making meaningful jobs available throughout the lifespan — for so long as Boomers can and want to keep working.

If we can (and we must) achieve a redefinition of aging in society, we can dramatically reduce the potential fiscal impact of aging. Social insurance programs can persist as envisioned, updated to meet the needs of a new generation intent on reframing aging.

Many experts agree that when Boomers work just a few more years beyond 62, they can substantially improve their own retirement prospects while improving the fiscal soundness of Social Security.

But we cannot lose sight of the care and compassion compelled by these programs, nor can we forget that those who ultimately qualify to receive social insurance have paid their dues over many decades, committed to these promises with every paycheck.

With foundational social insurance granted by Social Security and Medicare — the assurance that poverty and chronic illness in old age is not inevitable — Boomers can be inspired to transform their lives from success to significance. This generation has the will, the means, and ultimately the technologies available to empower rather than imprison a nation.

This is already happening if you look for the signposts.

Comments

[Brian Mitchell]

"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, the program is nevertheless responsible for providing 40% of post-retirement income, a meaningful and significant shelter against poverty — and national disgrace. For about 66% of retirees over 65, Social Security represents more than half their income.

These programs free up society’s wisest, giving them greater opportunities to contemplate and then act on solutions to this nation’s myriad problems. Social insurance can give aging adults more of a chance to actualize, to give back, and to create."

...This "gift of security" is provided at the point of the taxman's gun. I want to actualize, give back, and create too. It is easier to do so with credibility when I am not being subsidized by the efforts of others. If you want to live a life of largesse, earn it.

You state that over 40% of retirement income is from SS. This is no badge of honor. The national disgrace is that we have so many that are unwilling to provide for themselves and live within their means. Did "the man" keep you down and prevent you from planning ahead? Were you not provided enough freedom to do so? Do I sound like your uptight father or grandfather?

[Paul]

“What we have to do today,” adds Carstensen, “is re-engineer society so that it supports satisfying, independent and healthy lives for older people.”

In other words, "If I cannot adapt to society, I will force society to adapt to me."

I think that sums up our current problems with the Boomers. Fascism is not so far away

[Brent Green]

Okay, Paul, by your logic, would you also consider it fascist when we "adapted society" to become more gender inclusive or racially inclusive? Without social force, marginalized groups remain marginalized. That is our nation's history.

If you read all my posts, you'll see that I am arguing not only for perpetuation of social insurance programs but also for a social environment where people over 50 and 60 can gain access to challenging jobs (not just as Wal-Mart greeters). Boomers consistently report a desire to keep working, to keep paying social insurance payroll deductions, and to keep contributing. But there is plenty of evidence of age discrimination in hiring and retention practices.

Finally, keep in mind that Boomers have been paying for social insurance through payroll deductions (and thus paying for the benefits given to your grandparents and parents) for anywhere from 25 to 45 years (44, in my case). Entitlements are not exactly a gift.

[Mike]

You really don't have to be an economist to grasp the issues facing the country, but any analysis which lacks a sober and correct coverage of the financial issues is lacking.

The problem isn't entitlements or entitlement spending. It's fundamental mis-management of this country's finances. Sadly, baby boomers have simply sat by and watched our nation's leaders squander the Social Security and medicare trust funds to prop up present spending.

The Social Security and Medicare programs were set up to run a surplus so that there would be enough money to cover the benefits of the boomers. Unfortunately, the politicians took this surplus and spent it like it was tax revenue. What this means is that when the programs need to claim this money, it's going to have to come from everyone else's taxes. Put in other terms, for years our society has benefited from additional government spending as a result of the trust fund surplus being spent right away instead of saved. When the trust funds start retrieving their money, society will be hurt by the reduction of government spending as a result of tax dollars being funneled back into the entitlement programs.

Perhaps this doesn't sound like a big deal. But the reality is that if the status quo is mainained, the country is headed straight into bankruptcy, and it might not take even 20 years if the recession is bad enough and the politicians keep spending money they don't have ... oh, i mean taxing the younger generations.

Probably the best thing the boomers can do is die early. Instead of draining medicare and social security as they fight for every last minute on this earth, how about a recognition that we all die and perhaps it's not worth the resources spent on getting an extra 2 months of life. In other words, I'd pay for my parents to get something like a hip replacement, but not for the treatment of a terminal illness.