Watch 160 Years of Population Aging...In One Chart
Over at Calculated Risk, Bill McBride has created an animated chart showing America's age distribution evolve, as far back as 1900 to the current day to the projected age distributions through 2060. We've written before on The Bottom Line that population aging will be one of the key drivers of the long-term debt problem going forward, along with rising health care costs. Aging is projected to account for 75 percent of the increase in spending on Social Security and health care by 2037. After seeing the chart, that is not a surprise.
While long-term budget projections are inherently uncertain, population aging's effect on the budget is relatively predictable. We know that demographics will push up spending on retirement programs which will be a main driver of increased spending and debt in the coming decades. By acting now, we can deal with our current unsustainable path while minimizing any negative effects on beneficaries.