Boomers May Lower The Boom on Social Security: NCPA Study

October 25, 2001( - Some 77 million baby boomers will begin to retire in this decade, putting a strain on the resources in the Social Security and Medicare systems, a study by the National Center for Policy Analysis (NCPA) points out.

The study, which contrasts the Social Security and Medicare benefits expected by new retirees with what workers now entering the labor market can expect, notes that by 2030, the cost of elderly entitlement programs will double today’s cost relative to the national income.

According to the study’s findings:

  • a 65-year-old male can expect to receive $71,000 more in benefits than he pays in taxes before he dies, while a 65-year-old female can expect a net gain of more than twice that amount,
  • in comparison, a 20-year-old male can expect to pay $312,000 more in taxes than he will receive in benefits, his female counterpart can expect to pay $92,000 more in taxes than she will receive in transfer benefits over her lifetime

An American born today can expect to pay 17.7% of lifetime income over and above any benefits ever received, and the situation is deteriorating, according to the NCPA.

The study advocates a permanent increase in saving and investment equal to 10% of payroll and stresses that these funds be invested in interest-earning assets than can be sold in future years to pay benefits, promised under current entitlement programs.

The National Center for Policy Analysis is a nonprofit organization.

– Camilla Klein