They’re turning 62 this month, the first of the baby boomers are. Adorable, aren’t they, as they hum along to the Beach Boys on their iPods and dream of Davy Crockett coonskin caps? In February the 100,000 or so of these January 1946 babies who opted for early retirement will get their first Social Security checks (averaging between $900 and $1,000 a month), marking the beginning of a demographic wave that will boost the program’s rolls from 50 million to 80 million over the next two decades. Not so adorable, eh?
You’ve heard about the pending retirement of the boomers before, of course. You’ve also heard that Social Security faces some big funding problems. The two have less to do with each other than you might think. Social Security’s insolvency remains a hypothetical threat decades into the future. But because of the particular way its funding was rearranged by Congress in 1983, the rest of the Federal Government, as well as taxpayers, will begin feeling the cost of the boomers’ retirement in just three or four years. Read more.
My point is that Social Security is about to go within the space of a few years from being a big boost to the federal budget to a big drag. The current projection for when it goes from positive to negative is 2017. This isn’t really Social Security’s problem–the program has its funding guaranteed through 2041 or so. But it may mean a bunch of hard choices for the next president about taxes and spending.
A note on some of the data: The figure of 100,000 boomers getting checks (actually, it’s mostly electronic payments) is a guesstimate, based on the Social Security Administration’s own estimate (given to me over the phone by a PR guy there) that about 1.1 or 1.2 million 62-year-olds will apply for benefits this year. It’s almost certainly too high, as births weren’t distributed evenly over the course of 1946 but rose as the year wore on. But I was afraid that if I used a number like 80,000 or 90,000 it might appear misleadingly exact. The “$900 to $1,000 a month” check average is based on the Social Security Administration’s data on what 62-year-olds were getting in December (the average for retired workers was $934.49).
A few paragraphs into the column, I write that
the boomers will, as a group, put more into Social Security than they get out. (That’s true of all age cohorts born since 1937; it’s the Social Security recipients born before then who have, as a group, made out like bandits.)
I phrased that parenthetical remark the way I did mainly because I feel like I haven’t been getting enough angry hand-written letters from long-time Time subscribers lately. It is based on estimates made by the Social Security Administration’s own Dean Leimer, which can be found in this 1994 working paper (danger:pdf). The age cohorts that received the biggest windfall were those born between 1905 and 1915. And I don’t begrudge them a penny of it.