For you and me, aging is inevitable. For the population as a whole, it doesn’t have to be. Throughout the 1950s and 60s, the US population was actually getting younger. But as the baby boomers have aged, our society has aged along with them. This poses some unique challenges for the US and for Massachusetts. How can we sustain economic growth if the number of workers is shrinking? Might the strain on government budgets be too much? What if our response to aging ends up hurting vulnerable groups, like the poor?
How old have we gotten?
Back in 1970, half the people in the US were under 28 and half were over 28. In other words, 28 was the median age. Today, the US median age is 37.
The trends in Massachusetts are quite similar. Seniors make up a growing share of the state population, while the number of children continues to shrink. The attached charts give the details to date, but there may be even more dramatic changes ahead. Moody’s analytics projects that by 2025 nearly 20 percent of the Massachusetts population will be 65 or older.
What does this mean for the budget?
The federal budget is going to be profoundly affected by the aging of our population. That’s because a substantial share of federal money goes to support social security and Medicare, two programs that primarily serve older people. As that population grows, the cost of those programs will too. Generally speaking social security is in better shape than people generally acknowledge but long-term Medicare costs are a real concern. One of the forgotten initiatives of the Affordable Care Act (a.k.a Obamacare) was to introduce a number of pilot programs designed to reduce long-term health care costs.
In Massachusetts, the impact is likely to be less worrisome. Most state dollars go to either education, where the population has been shrinking, or Medicaid, which is primarily for the poor rather than the elderly. To be sure, there are some elderly care programs that we may need to expand, but the overall effect on the state budget should be far more manageable.
What does aging mean for our economy?
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