CHICAGO (Reuters) - America is aging, and it’s supposed to be a big downer. Pensions are crushing government budgets, Social Security is in trouble and Medicare costs are going through the roof.
But someone must be putting Prozac in our water supply, because we don’t seem to be fretting. A recent Pew Research Center study of attitudes about aging in 21 countries finds Americans far less worried about the aging trend than others. Just 26 percent say aging is a problem in our country, compared with 43 percent of the British, 55 percent of Germans, 67 percent of Chinese and 87 percent of Japanese.
Pew chalks it up to America’s relatively youthful demographics. Although 21 percent of us will be over 65 by 2050, up from 13 percent in 2010, our median age will still be five years younger than that of the rest of the world. That’s mainly because we have higher rates of immigration, and immigrants tend to be young. By contrast, Japan, China, South Korea and many European countries will have much larger aging populations dependent on shrinking workforces in the years ahead, Pew notes.
Our blase attitude toward aging is striking in light of politically motivated efforts to whip up a frenzy on the topic. Proponents of cutting Medicare and Social Security benefits warn that these programs will eat our economy alive if we don’t curb them. Some have even tried to pit generations against one another by trying to make the case that the old literally are stealing from the young. We heard this in the 2012 Republican primaries from Texas Governor Rick Perry, who infamously described Social Security as a “Ponzi scheme” that takes from the young to pay benefits to the old.
The generational arguments get a more serious hearing in some public policy circles, notably in an annual report from the Urban Institute that tracks the declining share of federal spending on children. The report’s most recent edition, issued last September, notes that federal spending on kids is on track to fall from 2.2 percent to 1.8 percent of gross domestic product from 2012 to 2023, while spending on spending on Social Security, Medicare and Medicaid will rise from 9 percent to 10.4 percent of GDP.
The comparison is at least partially one of apples to oranges. Social Security benefits are paid out of worker contributions made over their lifetimes, like any other pension system - and part of Medicare’s spending also is self-funded. What’s more, a portion of Social Security and Medicare benefits go to young people through survivor and disability payments - and the vast majority of Medicaid dollars are spent on low-income women and their children.
The federal GDP trend data also doesn’t reflect spending on kids at the state and local level, where most education dollars are spent. And the numbers don’t capture private spending.
“People vastly overestimate how much money goes from the young to older people,” says Ted Fishman, author of “Shock of Gray,” a 2010 book about the global economics of aging. “They tend to look at it only in terms of the public sphere, but in the private sphere the dollars flow overwhelmingly in the other direction - just look at what grandparents spend on grandchildren, or what parents spend on college tuition.”
In his book, Fishman explains how the aging of the world’s population will drive globalization and immigration patterns in the years ahead, and will determine the economic destiny of nations. He thinks Asians’ worries about aging are justified.
“The countries that worry are under-pensioned - China has no real pension system.” he says. “And support of the elderly by families there is falling because of the country’s rapid modernization. “Young Chinese are migrating from rural communities to urban areas that are a great distance from their families, and the bonds get tenuous.”
But - absent a Prozac conspiracy theory - what is making Americans so much more optimistic about our gray transition? Fishman thinks ignorance may be a factor. “We think blithely about a lot of things that the rest of the world is more realistic about - and it might just reflect our low level of financial literacy.”
But the Pew findings might just reflect accurate American instincts about what it will take to care for our aging society. “We’re pretty good at muddling through,” Fishman says. “We are very good at supporting each other and taking care of family members - our familial supports are very strong.”
Family members do provide the majority of long-term care services, reports AARP, and 68 percent of Americans told the University of Chicago’s National Opinion Research Center last year that they believed they could rely on family members for help. That could change in the years ahead; AARP research projects that the ratio of available caregivers to those in need will shift sharply by 2050 as the country ages. That will put new pressures on an already strained system of institutional nursing care.
Healthcare costs - separate of long-term care - also are worth worrying about. The rapid escalation in healthcare inflation in the United States has moderated in the past few years: After rising anywhere from 6 percent to 10 percent annually from 2000 to 2007, the national health expenditure data tracked by the federal government showed growth of just 3.9 percent annually from 2009 to 2011. But few experts are convinced those numbers translate into a sustainable long-term trend - and Medicare spending will mirror the broader healthcare economy.
There will be other “gray” challenges. Social Security already is on track to replace less income in the years ahead because of reforms made in 1983, and its finances will need a fix if we’re to avoid more cuts starting in 2033.
Our task, Fishman says, is to consider increasing longevity as a positive development, and an opportunity.
“We should acknowledge the great gift of getting older - fear shouldn’t be our dominant emotion about this change,” he said. “We should be optimistic about it, but we also need to be willing to do our job as citizens and be smart about it. That means taking better care of our finances - working longer, staying engaged with our families and taking better care of our health.
“But getting more years of life is the best thing that has ever happened to humankind.”
(The opinions expressed here are those of the author, a columnist for Reuters.)
Editing by Douglas Royalty
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