Sponging Boomers

Sponging Boomers

 This is a fantastic article. A reconciliation of economic realities and unsustainable government promises has barely begun; but it most certainly has started and will inevitably continue.  Make no mistake about it – it will happen. How this reconciliation exactly unfolds – i.e. via higher taxation, reduced entitlements, growth, austerity, inflation, or most likely some mix of each – will directly impact your investments, your home value, your income, and your social safety nets. Not too many articles are this concise and well written. This is, without a doubt, essential reading for anyone trying to make sense of where we are and, more importantly, where we are headed.

 Excerpt from the article:

The struggle to digest the swollen generation of ageing baby-boomers threatens to strangle economic growth. As the nature and scale of the problem become clear, a showdown between the generations may be inevitable. ……………….
………………….Boomers’ sponging may well outstrip that of younger generations as well. A study by the International Monetary Fund in 2011 compared the tax bills of a cohort’s members over their lifetime with the value of the benefits that they are forecast to receive. The boomers are leaving a huge bill. Those aged 65 in 2010 may receive $333 billion more in benefits than they pay in taxes (see chart), an obligation 17 times larger than that likely to be left by those aged 25.  Sadly, arithmetic leaves but a few ways out of the mess.




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