CHICAGO (Illinois News Network) — Aging baby boomers are on track to tip the scales toward retirees over kids for the first time in American history.
It’s a trend with broad implications for healthcare and other industries. It could even affect local tax bills and Social Security.
A report from the U.S. Census Bureau shows that the median age of the U.S. population is expected to grow from 38 today to 43 by 2060. The reason is that Baby Boomers are approaching retirement age and the Great Recession has younger adults putting off having kids.
“By 2030, all baby boomers will be over the age of 65,” Census Bureau Demographer Lauren Medina said. “The age structure is and will continue to move upward as the number of births slow down and the number of deaths increase in aging population.”
The reversal could also impact local governments, which have promised millions in pension benefits to employees who will retire soon.
With fewer people paying taxes and fewer public employees, budgets could be further squeezed.
“You’ll have to either tax or borrow your way out of it,” said Robert Gray, a retired founding partner of a suburban Chicago wealth management firm. “That’s not good for the long-term hope of getting any of that money.”
Even without these new retirees, Illinois’ current unfunded pension liabilities are more than $130 billion. More than a fifth of the state’s annual budget goes to paying pension costs. Gray said that the average Illinoisan is going to see more financial stress as these bills come due.
Derek Fautsch, a financial advisor at Secured Retirement Advisors, warns people collecting the federal retirement benefit and those still working to be prepared for a tax hit when the fund starts getting short.
“There’s a high likelihood that they would just tax your Social Security,” he said. “It’s even more likely that they’ll tax workers more to make up the deficit.”
Both Gray and Fautsch say that the average American worker isn’t saving as much as they should to be prepared for the higher taxes and costs of living.