The Looming Demographic Crisis
The U.S. is one the precipice of an unprecedented demographic change. In the next few years, the baby-boomer generation will begin retiring. Maine is at the forefront of this change and, in fact, is currently the oldest state in the union with a median age of 40.2 years. A graphical illustration of Maine’s aging population from 1970 to 2030 based on Census Bureau data and forecasts can be found here on the MHPC website. Naturally, this will have profound economic, political and social ramifications.
In particular, a recent study –by Ronald Lee and Ryan Edwards titled “The Fiscal Impact of Population Aging in the U.S.: Assessing the Uncertainties”–highlights the government fiscal implications of this demographic shift. They find that “Population aging, accelerating as the baby boom generations age, will have important fiscal consequences because expenditures on Social Secuirty, Medicare, and institutional Medicaid make up more than a third of the federal budget . . .changing demographic realities will require some combination of substantial tax increases or substantial benefit cuts, or other forms of restructuring.
Below are two key charts from their report. I think they are pretty self-explanatory.
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