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Boomer Retirement Roundtable
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FROM: Clive Crook
TO: Phillip Longman, Megan McArdle
SUBJECT: Megan McArdle's Jan/Feb article
DATE: December 23, 2007

Interesting that, as Megan points out, as many as one in four American families is providing some sort of home care for an elderly relative, neighbor or friend. That is higher than I would have guessed. On the other hand, it is lower than I would wish if I wanted to argue that demographic trends are going to cause a huge shift in this respect. Also, the childless Boomer seniors of the future will still have neighbors and friends, and even some relatives (just no children of their own). The number you want for the discussion of the social impact of childlessness is how many of the elderly are receiving home care from their own children. I don’t know the answer and don’t have time to look, but it is evidently fewer than one in four. My earlier guess that this adjustment, sad as it may be, is already substantially complete seems somewhat confirmed. (One of the reasons for it, no doubt, is women’s increased engagement in the paid labor force—another shift that has already mostly happened.)

I’m still thinking over Phillip’s point about a growing racial and ethnic divide. I’m not sure I see that the ageing of the population need add to this much—though, yes, there is the danger of a growing cultural divide between old and young, driven by fiscal arithmetic and loosening family ties. But I would qualify Megan’s optimism on the racism point by noting that, though low-skill immigrants will, as she says, be increasingly valuable to the economy, that does not guarantee they will be recognized as such. Illegal immigrants are valuable to the economy already. That does not mean they are welcomed, or that they are spared blame for the country’s economic difficulties. Another tangential thought: Perhaps it is true, as Megan says, that racism will continue to subside—but race still divides America to an extent that this Brit, at any rate, finds alarming. Yes, there is a big black middle class in this country; the brightest and most ambitious can rise higher, meeting less resistance, than in Europe. But look at the racial composition of urban poverty in the United States, and remember that upward mobility out of the bottom income quintile is lower here than in much of the EU. It constantly surprises me that racial unrest is as subdued in the U.S. as it appears to be.

As in Europe, the fiscal pressures of demography will be the salient issue—and in the U.S., as Megan says, they will exert themselves mainly through Medicare, which is on track to absorb, in the end, most of the economy. Since that will not happen (query: won’t it?), the question is how the trend gets stopped. British-style cost controls, meaning rationing? French-style cost controls, meaning enormous pay cuts for doctors? Something will have to give. A friend of mine, a liberal Democrat, argues for the British approach, because “so much money gets wasted on health care in the US”. She has had a couple of health problems, and sees several different specialists, out of network, paying the (modestly) higher charges out of pocket, because—“that’s obvious”—she wants to choose her own doctors. Choose your own doctors? Fifty years in Britain has programmed me to think, “What do you mean, choose your own doctors?”

The Boomers (living longer in retirement) will need to have saved more than their parents, and they have saved less. Yes, they will inherit their parents’ houses, but even so. Waiting to give a talk recently (on demographic trends in the United States, if you can believe it) I listened while the previous speaker walked through the calculation of how much you need in savings, at any given point in your life, to smooth your consumption during your working years and face no more than a moderate fall in income when you retire. By your early fifties, this figure is a handy multiple of your annual post-tax earnings. Hard to do with a zero savings rate and falling house prices. I scanned the room as this sank in, and almost everyone I could see had a glassy stare and was swallowing hard. Several husbands were being jabbed in the ribs.

Taken together, these financially stressed seniors-to-be will have a lot of votes. Which makes the question of how to fix Medicare even more fun to contemplate.

Shame on The Atlantic for not letting Megan go to Italy. You only live once, you know.

Page 1: Phillip Longman launches the discussion
Page 2: Clive Crook reacts to McArdle's piece and responds to Longman
Page 3: Megan McArdle responds to Longman and Crook