2 Ways Social Security and Medicare Could Unravel as Boomers Flood the System
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Gabrielle Olya
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Molly Sullivan
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For the first time in U.S. history, older adults are set to outnumber children, according to a new report from Western & Southern Financial Group. The number of Americans ages 65-plus is projected to increase by over 30 million by 2060, growing from 57.8 million in 2022 to 88.8 million; and the number of Americans ages 65-plus will surpass the population under 18 by 2030.
This imbalance is set to exacerbate the current strains on both the Social Security and Medicare systems. Here’s a closer look at why — and what Americans should be doing to prepare.
Retirees Are Reliant on the Support of Working Americans
Working Americans pay into programs like Social Security, which supports Americans who are already retired. According to the Western & Southern Financial Group report, in 2020, there were 3.5 working-age adults for every one person of retirement age; by 2060, there will only be 2.5 working adults for every one person of retirement age.
“As the U.S. population ages, there are fewer workers to support each retiree,” said Katherine D. Goldsmith, assistant vice president of advanced markets at Western & Southern Financial Group. “This puts pressure on Social Security, which is projected to deplete its trust fund by 2033. A shrinking tax base and growing retiree population make the program financially unsustainable in its current form.”
The Medicare Program Can’t Keep Up With Rising Costs
As Americans continue to live longer, they require more financial support from Medicare to pay for their care. According to data from the Centers for Medicare & Medicaid Services, Medicare expenditures increased from $675.9 billion in 2016 to $1.03 trillion in 2023 — a 52% increase in just seven years.
“Medicare costs are rising fast as the senior population grows and lives longer,” Goldsmith said. “Higher demand for long-term care and medical services for older adults are among the drivers of the increase. As more people enter retirement age, Medicare isn’t equipped for this rapid demographic shift.”
What Retirees and Pre-Retirees Should Do To Prepare
Many Americans are entirely reliant on programs like Social Security and Medicare to cover expenses in retirement. According to AARP, 20% of adults ages 50 and older have no retirement savings. However, this can be extremely risky given the insecurity of government sources of aid.
“Many older Americans are financially unprepared for retirement,” said Mark Caner, president of W&S Financial Group Distributors, Inc. “To prepare, they should boost savings, reduce debt and consider delaying retirement. Working longer can help stretch savings and maximize Social Security benefits.
“Planning for higher healthcare costs is also key,” he continued. “Taking action now can help offset potential cuts or increased costs down the road.”
However, preparing financially is not enough, Caner said.
“Emotional and lifestyle planning are just as vital to ensure a fulfilling and secure retirement,” he said. “Retirement often means losing the social connections, structure and sense of purpose that work provides. It’s essential to plan how those needs will be met — through relationships, meaningful activities or new goals.
“Evaluating medical insurance costs and maintaining the freedom to choose caregivers is also critical,” Caner continued. “Ultimately, retirement readiness isn’t just about what we’re leaving behind, but what we’re moving toward.”
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