That’s the title of the Citi research note on US managed care where we came across this chart:
The big impending climb in boomers hitting retirement age is something everyone has worried about for a long time, but we’d failed to realise how immediately precipitous it would be. Check out the jump in next year’s forecast.
Most discussions of this demographic trend focus on what it means for the future of budget deficits, health care expenditures and other fiscal matters — and they point to metrics like the old-age dependency and economic dependency ratios.
But as the boom in boomer retirements gets nearer, we’ve also seen new studies this year that project its impact on things like consumption and stock market valuations. More recently there’s been an interesting discussion throughout the blogosphere of what this could mean for the labour force participation rate.
To begin with, the participation rate was in secular decline even before the recession for a few reasons. In addition to the ageing of the population, there’s been a plateauing of the rate for women after a decades-long increase. This chart from Credit Suisse shows how the decline had begun well before the current recession:
We agree with Calculated Risk and Tim Duy that the more recent drop-off in the participation rate is more the result of cyclical factors than demographic trends, as cited in this Bloomberg report. (See also Karl Smith and Calculated Risk on young adults dropping out, mostly to pursue higher education, and Catherine Rampbell on how the decline of people in the labour force in the November unemployment report can be entirely explained by women dropping out of it.)
But the larger point is that the secular decline will be difficult to reverse even if the economy gets going again. Here’s another chart from Calculated Risk, which shows a trend that might slow the pace of decline a little:
The participation rate for people in the 65+ category continues to increase. But it remains significantly below the rate for younger categories — and, well, there’s simply about to be a lot more of them.
So, once again… Unless the old are finally willing to pony up, FT Alphaville continues its longstanding advocacy for the only reasonable solution: kill ‘em all.
Related links:
Kill the old – FT Alphaville
More reasons to kill the old – FT Alphaville
The Boomer Solution – FT Alphaville
Inigo Montoya has a delayed message for S&P – FT Alphaville