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What the Boomers are leaving their Children 

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What the Boomers are leaving their Children 

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This January, the first baby boomers turn 65. The huge post-Second World War generation-which numbers 76 million in the United States, makes up almost a third of Canada's population, and according to one estimate, controls 80 per cent of Britain's wealth-will continue to enter their dotage at the rate of tens of thousands per day for the next 20 years. By 2050, there will be 30 million Americans aged 75 to 85, three in 10 Europeans will be 65-plus, and more than 40 per cent of Japan's population will be elderly. In Canada, the ratio of workers to retirees-currently five to one-will have been halved by 2036. And despite the odd dissenter, the generation that still oddly finds Paul McCartney relevant has made clear its intention to take everything it feels it has coming. It will be up to all who trail in their wake to pay for their privilege.

Common sense, not to mention decency, wouldn't call that just. But an outsized, over-entitled, and self-obsessed demographic is awfully hard for politicians to ignore. Take Britain's example. In last spring's general election, the most effective ad run by David Cameron's Conservatives was also one of the simplest: a close-up of a newborn baby, wriggling in a bassinet as a music box tinkled in the background. "Born four weeks ago, eight pounds, three ounces. With his dad's nose, mum's eyes, and Gordon Brown's debt," intoned a female voice. "Thanks to Labour's debt crisis, every child in Britain is born owing £17,000. They deserve better." The point was impossible to miss: the time had come to stop mortgaging the country's future.

As his first act, the new prime minister, a 44-year-old Gen Xer, cut his and his ministers' pay by five per cent, and froze all their salaries for five years. Tackling the U.K.'s $177.5-billion budget deficit and $1.6-trillion-plus national debt-annual interest payments alone stand at $70 billion-would require everyone to sacrifice, he told Britons. But there were also expectations that the burden wouldn't be equally shared. After all, one of Cameron's leading wonks, David "Two Brains" Willetts, now the minister for universities and science, had published a rather pointed manifesto, The Pinch: How the Baby Boomers Took Their Children's Future-and How They Can Give It Back, just before the election. After their victory, Thomas Friedman, the New York Times columnist, applauded the coming reckoning for a generation-his own-that had "eaten through all that abundance like hungry locusts." And even as the new government's chancellor of the exchequer, George Osborne, stood before Parliament in mid-October to announce $131 billion in spending cuts over the next four years-and the elimination of as many as 500,000 public sector jobs-the protect-the-youth rhetoric continued. "Today's the day when Britain steps back from the brink," he said, ensuring "that we do not saddle our children with the interest on the interest on the interest of the debts we were not ourselves prepared to pay."

The reality, however, proved to be somewhat different. The age when U.K. citizens can start drawing old-age pension would gradually increase from 65 to 66, but other entitlements like free eye tests and prescriptions for the elderly would remain untouched, as well as winter fuel allowances, and free local transit for anyone over 60. Among the biggest budget losers was the department for education, facing an overall reduction of 10.8 per cent, which according to one economic think tank will translate to funding cuts for 60 per cent of primary schools, and 87 per cent of secondary schools. And the legacy of "Two Brains" for Britain's shafted youth? A 40 per cent cut to post-secondary teaching grants, and a doubling-or in some cases, tripling-of tuition, to as much as $14,500 a year.

On Nov. 10, more than 50,000 angry students gathered in London to rally against the cuts. A video of Nick Clegg, the Liberal-Democrat leader and deputy prime minister, promising to do away with university fees during the election campaign, was greeted with choruses of "wanker, wanker." "They're proposing barbaric cuts that would brutalize our colleges and universities," said Aaron Porter, the president of the National Union of Students. "We're in the fight of our lives. We face an unprecedented attack on our future before it has even begun." Later on, a crowd of several thousand descended on the Conservative Party headquarters, trading punches with police, smashing windows, lighting fires, and for a time, occupying the building.

"The situation for young people is not terribly good," Ed Howker, a 29-year-old London journalist and author, says in a classic bit of British understatement. "And there's no sense from the government that they have the interests of the next 30 or 40 years of Britons in mind." Of the country's 2.45 million unemployed, close to 60 per cent are under the age of 30.The new budget has not only frozen civil service hires, it scrapped two youth jobs funds, slashed rent subsidies, and cut the money for new housing by half. Howker, who along with Shiv Malik wrote the just-released Jilted Generation: How Britain Bankrupted its Youth, says the sense of despair is becoming overwhelming. "Our generation just seems to be a lot worse off. In terms of key things like getting stable housing, or a well-paid job, or a successful career, we just don't have it." The boomers' aren't evil, he says, but they nonetheless bear much of the responsibility. The generation that relentlessly mythologizes its "peace and love" heyday became ardent consumers as they aged, and ended up moulding politics in their "me-first" image. "It's a consumer version of democracy, where politicians realized that if they merely satisfied the short-term desires of their electorate, rather than think in the long term and make good decisions on behalf of the future of the country, they would win elections," Howker argues. The bills become somebody else's problem.

Want a scary number? How about $1.5 trillion, the amount the C.D. Howe Institute estimates Canada's rapidly aging boomers are going to cost Ottawa and the provinces in extra health and pension expenses over the next 50 years. Or perhaps 2,500, the number of new long-term care facilities the Canadian Medical Association says will be needed to accommodate the doubling of Canada's 65-plus population in two decades. Sixty thousand is how many RNs the Canadian Nurses Association predicts we will be short by 2022. Or maybe just one per cent, the expected annual amount of real per-capita GDP growth in Canada over the next 30 years as boomers leave the work force-less than half of what we've experienced over the past four decades.

Combine a demographic bulge with a falling birth rate and ever-increasing life expectancy (now 80.7 years at birth in Canada), and pretty much all the figures start looking ugly. "We have a significant challenge ahead of us," says Chris Ragan, a professor of macroeconomics and economic policy at McGill. "The tax base will slow down, and spending will speed up. We can't just do nothing."

Old Age Security, currently costing $33 billion a year, is already the No. 1 item in the federal budget, and Ottawa and the provinces collectively spent $183 billion on health care in 2009. By Ragan's estimate, health and benefit costs will be inflating federal and provincial budgets by a further $56 billion a year by 2040. (Last spring, a TD Bank report predicted health care expenditures in Ontario will rise from the current 46 per cent to 80 per cent of all program spending by 2030.) The options are stark. We can go the route of the U.K. and cut spending, or we can raise taxes. Stand pat, says the professor, and 30 years from now Canada will be back facing the same fiscal wall as it did in 1995, when the debt-to-GDP ratio peaked at 68.4 per cent.

More frightening still is the fact that the U.K.'s debt already stands at 73.1 per cent of GDP. In the tax-phobic United States, the Congressional Budget Office estimates the debt-to-GDP ratio, currently at 62 per cent, will rise to 87 per cent by 2020. Five years later, it will stand at 109 per cent. And by 2035 it will be 185 per cent. Later this month, a bipartisan commission set up by President Barack Obama will flesh out proposals to cut the US$14-trillion national debt by $3.8 trillion. Everything, including cuts to Social Security, Medicare and tax hikes, is reportedly on the table. "I think we need to listen, we need to gather up all the facts," Obama told reporters. "If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they're going to need to be armed with the information about the kinds of choices that are going to be involved." Some of the trial balloons being floated-like raising the retirement age to 69 by 2075-suggest the real burden will be again borne by the post-boomer generations.

In October, the Center for Strategic and International Studies, a Washington think tank, debuted its Global Aging Preparedness Index, ranking both the fiscal sustainability and the adequacy of government benefits for the elderly. Canada was in the middle of the pack in both categories, ninth and 11th respectively. France, Spain and Italy were judged to be in an even deeper hole than the U.K., Japan or the U.S.: facing not just debt problems, but spiralling pension and health care costs, as well as some of the lowest birth rates in the developed world. India, with a relatively young population, meagre benefits, and close to 83 per cent of its elderly citizens already living with their children, looks best prepared for the coming storm.

But surely, the best-educated generation in history, not to mention the trailing Gen X, Y and the millennials, must understand all of this: how precarious the global situation already is, and the dangers facing Canada. How we all must prepare. Seemingly not. Household debt in this country reached $1.41 trillion last December, according to a study by the Certified General Accountants Association of Canada, about 2.5 times greater than the 1989 amount. The personal debt-to-income ratio reached a new record high of 144.4 per cent at the end of 2009. And 43 per cent of Canadians admitted to being concerned about their retirement, yet 32 per cent were committing nothing to savings or RRSPs. (Not surprisingly, young people, trailing school loans and other debts, save the least, with only 19 per cent putting 10 per cent or more of their earnings away, according to a different 2009 survey.)

And many of us are either too scared, or stupid, to even risk reading the tea leaves. Close to half of respondents to a new national retirement survey by Bensimon Byrne, a Toronto ad agency, said they had not yet calculated how much income they will receive when they stop working. But 86 per cent said they expected CPP, and 83 per cent Old Age Pension, to be crucial pieces of their financial puzzle. And 77 per cent are counting on eventually selling their house or condo to finance their golden years.

A capital idea. But what happens when millions of boomers all start selling off their homes to the far smaller and less wealthy generations working their way up the food chain? The baby boom generation who "have driven up housing demand and prices for three decades" could have the opposite effect once their mass sell-off commences, Dowell Myers, a University of Southern California demographer, wrote in a 2008 examination of the "generational housing bubble." Crunching the numbers state by state, he concluded that the current subprime-inspired meltdown may well pale in comparison to what lies ahead: lots and lots of sellers, far fewer buyers, and a two-decade long slump. "Whereas the major housing problem was once affordability, it could now be homeowners' dashed expectations after lifelong investment in home equity." The study won a prize from the American Planning Association.

Experts in Canada tend to be more optimistic about the fate of the domestic real estate market, but in a country where close to 40 per cent of personal wealth is now tied up in home ownership, even a small price drop could have drastic consequences. Boomers may have big dreams about retirement in sunny climes, or riding their Harley Davidsons into the sunset (the average age of U.S. motorcycle riders is now 47, up seven years since 2000), but they certainly haven't figured out how to pay for it all. A recent TD Bank survey found that just 44 per cent of Canadian boomers have actually paid off their mortgages. And among those who haven't, a quarter still had 75 per cent or more of the debt left to pay down.

The cover of the October edition of The Atlantic features a cartoon of Doonesbury 's Zonker-a blissed-out hippie for 40 years and counting-rolling up his sleeves as the sun sets in the background. "The boomers' last chance," promises the sell for the story by Michael Kinsley. Part generational apology "for ruining everything," and part call to arms, the piece suggests he and his contemporaries have just "19 years to redeem themselves." Kinsley's big idea-offering the next generation a fresh start by reducing the national debt, massively investing in education, and repairing America's crumbling infrastructure-sounds nice. Although in true boomer fashion the "extraordinary historic" fix he proposes-flat taxing the inheritances they are about to receive from their parents, and might reasonably have been expected to one day pass on to their own kids-somehow misses the point. Net cost to his "self-absorbed, self-indulged, and self-loathing" generation? $14 trillion of somebody else's money.

A truer indication of the kind of battles that boomers are girding to fight can be found in the news pages: a growing movement to enrich, or even double, Canada Pension Plan benefits, via substantially higher premiums for businesses and the ever-shrinking work force. Or last week's decision by the Canadian Human Rights Tribunal reinstating two Air Canada pilots who were forced, under company rules, to retire from flying at age 60. "This will be welcome news for all Canadians that one more element of age discrimination has been undone," proclaimed Susan Eng, vice-president of advocacy for the Canadian Association of Retired Persons (CARP). "The decision is especially important for those people who must stay in the labour force for economic reasons or simply for the dignity of work."

Boomers seeking to extend their careers-by any means necessary-is a growing trend. Substitute teaching, once a way for young education grads to get into the profession, is now dominated by retired "double-dippers" collecting both a teacher's pension and a paycheque. Law firms in the U.S. are redrawing policies that forced older partners out in the aftermath of two high-profile age discrimination lawsuits, and greying Bay Street hotshots are now quietly pushing to remain at the top of their profit pyramids for longer. Whatever the reasons-debt, divorce, pride-baby boomers are serving notice that they don't want the gold watch and farewell parties they foisted on their elders. The Bensimon Byrne survey found that 62 per cent of Canadians between 50 and 64 expect they'll continue to work full or part time after hitting "retirement" age.

Recent graduates already at a disadvantage from the recession (a study by Canadian economists found it can take up to 10 years for those who enter the workforce during bust times to catch up on wages) could face even more challenges. That's an already well-established pattern in Europe where the youth employment rates and standards of living are significantly lower now than just a generation ago. French sociologist Louis Chauvel has even coined a term for such unfortunates: "babylosers."

The defining characteristics of the baby boomers have been their sense of self-importance and limitless entitlement. And Kinsley's plea aside, there is little reason to expect that will change any time soon. If anything, it's getting worse as they age. "The yuppies have become the grumpies," says Frank Graves, president of EKOS Research. "They're reluctant to give anything up. It's like Charlton Heston: 'From my cold, dead hands!' "

In the recent U.S. mid-term elections, boomer angst and anger fuelled the rise of the Tea Party and right-wing Republicans. And in Canada, suburban boomers-generally less educated and less well off than their downtown compatriots-form the base for Stephen Harper's Conservatives, and every-schlub Rob Ford's hostile takeover of Toronto City Hall. As perhaps their final legacy, boomers are dominating politics the same way they have transformed every other aspect of our society. To be sure, politicians share the blame for cynically playing to them. But it can't last forever. At least, not unless somebody rediscovers Ponce de Léon's fountain of youth.

"In five to 10 years we're going to start seeing a different Canada emerging," predicts Graves. Younger Canadians who don't vote now will start turning out in numbers as they age-but without the traditional party allegiances. (Ekos's surveys consistently suggest under-25s would elect a Green party majority.) Gen Y, who according to a study by a University of New Hampshire management professor score even higher for entitlement and narcissism than their parents, will slowly take over. And the concerns of boomers will start becoming less and less important, just like their position in the consumer markets they once dominated. "Unless they're buying Viagra or upright bathtubs, nobody cares anymore," says Graves.

And the truth is, the brewing war between generations will feature more clashes around conference tables than riots in the streets. Hallmark programs like old-age pensions and health care are too important to young and old alike to let wither and die, so fixes will eventually be found. American journalist Ted Fishman, the author of the new book Shock of Gray, says an aging society presents a lot of other changes that we should be worried about, like soaring rates of road accidents, depopulating suburbs and denser downtowns as seniors cluster closer together, and the stresses for young people who will be balancing careers, families and the care of their elders.

Greying populations aren't just a European or North American problem, they are now a global phenomenon. "You can't escape from it anywhere in the world," says Fishman. As boomers have gotten older, and more expensive to employ, our search for cheaper labour and goods has created a "feedback loop" in the developing world. China, with its "21st-century urban industrial wonderlands filled with young people siphoned out of the countryside," is now aging faster than any place on the planet, he notes. The combination of rapidly growing cities, better wages and higher educational aspirations are shrinking families worldwide.

The real paradigm shift might be in learning to view this inexorable greying of the globe as a good thing, rather than a problem. "On balance it's all overwhelmingly positive," says Fishman. "An aging world happens because people live longer, and because women can achieve their aspirations and don't have time for big families. We'll be investing much more in the well-being of the kids we do have, their feeding and education. They're the pillars for future economic development and prosperity."

Now all we have to do is convince the boomers that it's finally no longer all about them.

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What the boomers are leaving their children - Macleans.ca

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This January, the first baby boomers turn 65. The huge post-Second World War generation-which numbers 76 million in the United States, makes up almost a third of Canada's population, and according to one estimate, controls 80 per cent of Britain's wealth-will continue to enter their dotage at the rate of tens of thousands per day for the next 20 years.

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This is part of The Globe and Mail's week-long series on baby boomers and how their spending, investing, health and lifestyle decisions could affect Canada's economy in the next fifteen years. Is Canada ready for the boom? For more, visit tgam.ca/boomershift and on Twitter at #GlobeBoomers

Steve Nolan has some baby boomer problems at his doorstep. And he's one of them.

The 58-year-old vice-president at Plitron Manufacturing Inc., a Toronto-based maker of transformers, is overseeing the day-to-day operations of a firm whose 55-strong staff has many key employees closing in on retirement, including senior engineers whose skills and experience will be hard to replace. The factory floor has workers getting on in years, too, including one man well into his 70s who has eschewed retirement to stay in the job he loves.

The reality of an aging work force means "succession planning is becoming more and more important for businesses," he says. "It's not just at the CEO level. We've become leaders in the field in our technology. It takes time - you're not going to get someone out of school who possesses the knowledge that our people have. It takes some planning."

And soon, that planning will include replacing himself.

"In the next three or four years, I'll hire my replacement, or groom my replacement from within," he says. "My goal is to leave the company in a much stronger place, with a very good, sustainable future."

But reaching that goal is a challenge not just for Mr. Nolan, but for the entire Canadian economy, as the biggest demographic wave in the country's history hurtles into retirement. The baby boomers - that massive bubble of people born in the two decades following the Second World War, perhaps the most important cohort for economic, technological and social development in human history - have begun the transition into old age and, inevitably, death.

The result will be a dramatic greying of Canada's demography - one that has serious implications for the national economy, government policy and the well-being of its citizens. Without significant adjustments, we could be headed for decades of anemic economic growth, shrinking per capita incomes and eroding wealth. Governments could face skyrocketing deficits and tough choices about what kinds of health care and social supports we can afford, as a smaller pool of taxpayers must fund the rising costs of the growing numbers of seniors. The gaps between the wealthy and poor may widen into gaping social wounds, as the adequacy of pensions and private savings are tested to their limits.

And the grey shift has already begun. As of this year, for the first time, Canada has more people over the age of 65 than under 15. The age group that now encompasses the boomer generation - 50 to 69 - makes up 27 per cent of the population, compared with 18 per cent in that age group two decades ago. The number of people over 65, the traditional retirement age in this country, make up 16 per cent of the population - double their proportion in 1971.

And that's set to grow much more, and quickly. So far, only 18 per cent of the boomer generation has reached 65; the peak of the baby boom won't reach that age for another decade. By then, more than 20 per cent of the national population will retirement-aged; by the mid-2030s, it will be closer to 25 per cent.

While the baby boomers will retire with generally better health, a longer life expectancy and more wealth than any generation before them, the move of such a large population group from producers in the economy to consumers and, ultimately, dependents, will create a gaping hole in Canada's economic fabric. Our policy makers haven't yet come to grips on how to fill it - even though experts have been talking about this demographic inevitability for decades.

"We've known for a long time that this was coming. But it's very hard to get folks to move ahead of time," says David Dodge, a former governor of the Bank of Canada who has studied the economic implications of demographic trends since his student days. "Now, we're sitting knowing that we have a mountain to climb."

The biggest challenge for the Canadian economy - as well as those of most major Western countries whose populations are similarly maturing - is that the looming retirement of the boomer generation amounts to a giant brake on the labour force. Labour growth is the key ingredient in the production of more goods and services that adds up to economic expansion. And it is now face to face with a massive and irreversible demographic threat.

"Inevitably, the aging of the population, with more and more people exiting the work force either full-time or part-time - labour force growth slows down," said David Foot, economics professor at the University of Toronto and author of the 1996 bestseller Boom, Bust & Echo, the seminal work on the economic influence of the boomer generation. "And since labour [growth] is two-thirds of economic growth, inevitably economic growth slows down. So as we look forward, much slower economic growth will be the norm."

After peaking at 4 per cent in the 1970s and averaging 1.6 per cent in the 2000s, Statscan projections suggest the labour force will grow by only about 0.5 per cent a year in the 2020s. Forecasters say this labour stagnation will likely keep real economic growth below 2 per cent annually over the next decade, below the average of about 2.5 per cent over the past quarter-century.

Some of the impact of Canada's aging work force will be mitigated by its relatively large immigration program: About 250,000 new immigrants arrive in Canada each year, roughly double our country's natural growth through births and deaths. (On a per capita basis, Canada accepts about twice as many immigrants as the United States, and about four times as many as Japan.) But even with current levels of immigration, we're having trouble keeping up with even the first wave of retiring baby boomers. The number of new retirees in Canada has jumped from about 170,000 annually five years ago to nearly 250,000 today. Within a few years, we face retirement rates closing in on 400,000 a year.

"You can't use immigration alone to solve the aging work force problem," Mr. Foot says.

For many experts, then, the second key to tempering the slowdown in Canada's labour force is something that has already been happening as the boomer generation enters its senior years: Unprecedented numbers of older workers are staying in the workplace for longer than ever before.

In the past decade, the number of Canadian workers over 65 has spiked more than 140 per cent; the number of workers over 55 has surged 67 per cent, to more than 3.7 million. The labour force participation rate (the number of people either working or seeking to work as a percentage of the population) for people over 65 has nearly doubled, to almost 14 per cent, while participation in the 60-to-64 group has jumped 10 percentage points, to nearly 55 per cent.

Of course, that's still a long way from participation of the so-called "prime working age" population, from 25 to 54, which is north of 85 per cent. At that rate, experts say, we're already at or very near the realistic ceiling of labour contribution from the prime-age group. A key to keeping the labour market adequately supplied in the coming decade or so will be finding ways to keep the rising trend of seniors' participation going.

"Employers are going to have to be flexible," says economist Philip Cross, former chief economic analyst at Statistics Canada. "Older workers really like working part-time. They also like being self-employed ... You don't want to be tied to your desk for 37.5 hours [a week] for 50 weeks a year."

Experts also agree that mature Western economies could overcome the growth headwinds from their aging demographics by stepping up innovation and productivity - using technological and efficiency advances, and investing in upgraded facilities and equipment, to expand the per-worker productive capacity.

On that front, Canada has a lot of room to improve. Our labour productivity rate - the amount of economic output produced per hour worked - is 25 per cent below U.S. levels, and is below average for G7 countries. The World Economic Forum's Global Competitiveness Index ranks Canada only 22nd in the world in innovation, including a discouraging 27th in private-sector research and development.

"If you continue with our miserable productivity record, then you will at some point have falling incomes per capita," Mr. Dodge says, a consequence of having a smaller proportion of the population producing goods and services in support of a growing proportion of non-producing people. "If you're going to keep incomes up from everybody, they have to rise even faster for those who are actually in the labour force."

The oldest boomers have recently hit retirement age, and millions more will join them in the coming 15 years, in what amounts to a massive demographic shift.

The waves of retiring baby boomers are putting governments in an increasingly uncomfortable fiscal squeeze.

On the one hand, the boomers' exit from the labour force will slow economic growth, eroding the tax base and eating into government revenues.

Meanwhile, this growing bulge of seniors needs and demands more from their governments - most notably, health care and income support programs, such as Old Age Security. Health care spending in particular increases significantly for people 65 and older.

The result is that boomers are putting intense and growing pressure on government budgets. The provinces in particular generally aren't prepared for what's coming, warns Don Drummond, a former senior federal Finance official and Toronto-Dominion Bank chief economist.

"The potential growth rate is about to come down fairly sharply in Canada. Almost all forecasters have missed that," says Mr. Drummond, now a visiting scholar at Queen's University.

In a recent study for the Centre for the Study of Living Standards, Mr. Drummond and two research colleagues estimated that Canada's economy will grow an average of 1.6 per cent a year from 2014 to 2038, well below the 2-per-cent pace experienced from 2000 to 2014.

"People tend to think of demography as slow moving," he says. "It's not, and particularly not over the next 20 years. It's moving very rapidly."

Source: CSLS, Statscan

Slower growth drops directly to the bottom line for governments, dramatically slowing the pace of expansion of the tax base. Unless governments raise taxes substantially to counter the trend, provincial revenues will grow at roughly 3.5 per cent a year over next 10 to 20 years, according to Mr. Drummond. That's down from revenue growth of 4.5 per cent to 6.5 per cent from the mid-1990s to 2008.

"That's quite a different world, just on the revenue side, flowing from lower economic growth," he points out.

This all coincides with an equally unfavourable spending outlook. In nearly all provinces, spending growth is likely to outstrip revenues in every province except Manitoba and British Columbia.

The provinces east of Ontario will be hit hardest by this looming squeeze, while the West will manage better. Worst off will be New Brunswick, which is expected to have the slowest potential growth rate and the highest pension and health care pressures, Mr. Drummond says.

"The provinces are grossly overestimating growth and underestimating health-care pressures," he adds.

The fiscal squeeze also raises troubling questions about inequity between generations. The boomers generally did very well while they were in the workplace, earning higher inflation-adjusted wages than Generations X and Y, and enjoying better pensions and benefits. These younger workers are being saddled with the task of paying for rising spending needs, mainly in health care, which are eating nearly half of provincial budgets.

"We built this government machine that takes tax revenues from everybody and gives them disproportionately to this growing population of older people," says McGill University economist Christopher Ragan, who worked as a special consultant at the federal Finance department from 2009 to 2010, focusing on the fiscal implications of aging.

"These components aren't fully funded," he says.

The demographic forces are so powerful that governments must deal with the problem of rising health-care spending now, either by raising taxes or curbing costs. Future generations should not be expected to subsidize health care for baby boomers, he argues.

"We have to recognize that there is this issue, and the issue isn't going to go away," he says. "We have time to think about it, but it involves some difficult choices."

Cost of services that seniors need are rising faster than the revenues needed to cover them.

The C.D. Howe Institute has gone a step further by tallying the present cost of maintaining demographically sensitive government programs, such as health care, over the next 50 years. The total "implicit liability" is nearly $4.3-trillion, or $120,000 per person across Canada, with most of the burden - $107,000 - falling on the provinces.

"It's an arithmetic problem," explained Alexandre Laurin, director of research at the C.D. Howe. "It's similar to the Canada Pension Plan. Younger workers are going to be paying more to get the same thing."

The good news is that there are ways to counter the ticking demographic time bomb. The most obvious way is to curb spending growth, raise taxes, or both. Bolstering the labour force, through increased immigration and keeping more seniors working, would prop up growth and the tax base. Productivity gains would help, too.

Another potential saviour for governments is the roughly $3-trillion socked away by Canadians in registered retirement savings plans and employer-sponsored registered plans. Governments will tax these assets as they are withdrawn by retirees.

"Once the baby boomers start retiring, more of these deferrals will be taxed. It means more and more revenues [for governments]," Mr. Laurin said.

Meanwhile, analysts have spent years studying and reshaping public pension plans to ensure they can withstand the double hit of a boomer onslaught along with rapidly rising life expectancies.

Canada Pension Plan contributions were raised significantly between 1997 and 2003, for example, to ensure the worker pension plan could generate enough income to cover future needs. The Canada Pension Plan Investment Board now manages a $269-billion investment fund created to help finance future benefits. It is forecast to grow to $800-billion by 2040.

Canada's chief actuary, Jean-Claude Ménard, has estimated the fund needs to earn long-term real returns of 4 per cent annually after inflation to cover its obligations over a 75-year projected time frame. CPPIB says it has earned an annualized average return of 8 per cent - or a 6.2-per-cent real return after inflation is accounted for - over the past 10 years, which puts it safely ahead of target so far.

Bill Robson, CEO of the C.D. Howe Institute, says CPPIB has been "making out like bandits" in recent years, earning an investment return of 18.7 per cent in fiscal 2015 alone. But he still questions whether it can continue to earn needed returns over the longer term if interest rates remain low.

"If I knew where I could get a real return higher than 4 per cent right now on my savings, I'd mortgage everything I have and invest everything in it," he says.

At least CPP has a clear funding strategy. The universal Old Age Security (OAS) benefit paid to all seniors, as well as the supplemental Guaranteed Income Security (GIS) plan for low-income seniors, are paid entirely from annual federal government tax revenue. Projections forecast federal OAS and GIS costs to rise from $47-billion in 2015 to more than $100-billion by 2031.

But pension researcher Robert Brown, who has studied the impact of shifting demographics on Canada's social security programs, says the OAS cost increases should be manageable if the economy achieves modest growth because tax revenue will also grow over that period, helping absorb much of the impact.

OAS costs are expected to rise from 2.38 per cent of Canada's GDP in 2015 to a peak of 2.77 per cent in 2030, then fall back to 2.37 per cent of GDP by 2050 as the boomer generation dies, according to chief actuary forecasts.

"These numbers do not destroy a country - OAS is affordable," Mr. Brown says.

The biggest current debate about retirement planning is not the fate of CPP or OAS, but how well boomers themselves will be able to finance their retirement years beyond the minimum floor of support provided by government programs.

The decline of workplace pension plans means just 24 per cent of private sector workers are now covered by a plan, leaving most people on the hook to fund their own retirements. An era of low interest rates hasn't helped that task, as investment returns on retirement savings have been tepid for years.

"Low interest rates are only good in an economy with lots of young people looking to borrow and spend," said Mr. Foot, the Boom, Bust & Echo author. "They're a disaster in economies where you have boomers saving for retirement."

The outcome will inevitably be mixed, with many boomers living comfortably and many others struggling with a far lower standard of living.

Gisele Bouvier is already struggling at age 65. She was laid off from her information technology job in the federal government at age 62 and ate through a big part of her savings as she waited to collect OAS and CPP benefits this year.

Now living on $26,000 in annual income - half of which goes toward rent on her Ottawa duplex - most optional spending like cable TV and Internet service is out of reach. She listens to a lot of radio and volunteers her free time to work with anti-poverty group Acorn, which tries to secure affordable house for low-income earners.

"I see poverty ahead of me," she says. "You worry for the future. You live with this worry, and you say, 'Oh well, maybe I won't live that long.'"

University of Ottawa retirement researcher Michael Wolfson says his research suggests half of Canada's middle-income earners will face a significant drop in their standard of living when they retire.

He worries governments are not taking a "holistic" look the issue, considering the effects on social assistance, subsidized housing, drug costs and long-term care demands when a large proportion of boomers faces financial problems in retirement.

Other researchers, however, say the effect will be less severe. A private sector study earlier this year by McKinsey & Co., for example, suggested 83 per cent of Canadians will have enough to maintain their current lifestyle in retirement. McKinsey said the groups most at risk of big drops in lifestyle are mid- to high-income earners without workplace pension plans, especially those with low savings.

Low savings levels are not an isolated problem in the boomer demographic. An Ipsos Reid survey of 12,000 Canadians in 2015 shows 49 per cent of people 55 to 64 say they have saved less than 10 per cent of their retirement target to date, while household debt levels average $71,815.

At age 56, Wayne Hassar is keenly aware of his remaining debt. The Winnipeg-based insurance analyst's plans to retire at 60 hinge on his ability to finish paying his mortgage while ensuring he has enough saved for his two teenaged sons to go to university.

"We still have a mortgage, that's the elephant in the room for sure. That has to be paid off or the plan will not happen," he says.

Some experts point out that demographic projections of doom have been overcome by innovation before. Most famously, demographer Thomas Malthus looked down the path of world population growth in the late-18th century and predicted a global famine that never happened. (The Industrial Revolution did instead.)

"What really counts is innovation, technology, the organization of business, the expansion of human capital, and the animal spirits of capitalism," wrote author Chris Farrell in his 2014 book Unretirement: How Baby Boomers are Changing the Way We Think About Work, Community and the Good Life. "In other words, productivity trumps Malthusian demographics."

Andrew Violi, president of Mellow Walk Footwear Inc., a Toronto-based manufacturer of safety shoes, is an example of that kind of thinking.

"When I joined the family business 10 years ago, the average age of our work force was older and our machinery more manual, requiring skilled operators," he says. He responded by upgrading to more modern machines that "de-skill and simplify the set-up," and by training "a new generation of shoemakers," many of whom come from the ranks of new immigrants.
Further reading:
"Frankly, I was more concerned about this a few years ago," he says.

You can start Canada Pension Plan benefits as early as 60, or wait as late as 70 and get significantly more money every month. The choice depends on many factors including health, financial needs and taxes

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The boomer shift: How Canada's economy is headed for major change

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This is part of The Globe and Mail's week-long series on baby boomers and how their spending, investing, health and lifestyle decisions could affect Canada's economy in the next fifteen years. Is Canada ready for the boom? For more, visit tgam.ca/boomershift and on Twitter at #GlobeBoomers Steve Nolan has some baby boomer problems at his doorstep.

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If you're still a working baby boomer, do you feel like you're working longer and harder? If so, you're not alone. Career coach Nancy Collamer blogs for our friends at NextAvenue.org, and she has dug deep into a new report about the State of American Jobs. You might see yourself in it.
Still on the fence about whether it pays to invest in job training mid-career? Then consider this: According to The State of American Jobs, a new, mammoth Pew Research Center survey conducted with the Markle Foundation, the majority of U.S. workers see continuous training as essential to their future career success. And it's not just younger workers expressing this sentiment. Nearly 40 percent of older workers - those over 50 - believe so as well, Pew said.

So why do so many Americans, even those in the "twilight" of their careers, believe training must now be a lifetime commitment?

The short answer is that the workplace has experienced profound change over the past few decades. If you're not up-to-speed with the latest skills, you're running behind.

The Pew report analyzed U.S. Labor Department data from 1980-2015 and found:

Older adults are staying in the workforce longer than they used to. The share of adults 65 and older who are employed has risen steadily in recent decades, climbing from 12 percent in 1980 to 19 percent in 2015. The employment rate for adults 55 to 64 has also risen during that time, up to 62 percent in 2015. The share of workers 65 and older who were with the same employer for five years or more soared from 67 percent in 1996 to 76 percent in 2014.

Only 33 percent of workers age 50 to 64 described their job as "just a job to get them by;" 63 percent said they think of it as a career.

And as more people extend their careers, the need to upgrade skills later in life takes on new importance.

The report included some good news for older workers as well. The median pay of workers 65 and older rose 37 percent from 1980 to 2015. And the share of workers ages 65 and older with employer-sponsored health insurance increased from 31 percent to 51 percent.

Employment rose significantly faster for jobs requiring more education, skills and experience. The greatest growth was in jobs that typically require at least a four-year college degree and considerable-to- extensive training and experience. Employment in these high-skill occupations increased by a whopping 80 percent, from 22 million in 1980 to 39 million in 2015.

Often, these types of jobs require strong social skills, analytic savvy and technical prowess. Interestingly, this trend may have worked to the benefit of women, since they are more likely than men to be employed in occupations needing higher levels of social and analytical skills; a higher percentage of men work in jobs calling for greater physical and manual skills.

Americans are working more hours. No great surprise, but how much more might surprise you. The data shows that the combination of a slightly longer workweek (38.7 hours in 2015 vs. 38.1 hours in 1980) and an increase in the average number of weeks worked per year (46.8 in 2015 vs. 43 in 1980) equals an additional month of work per year compared to 1980.

In short, we are working harder, longer and in jobs that require an increasing number of knowledge-based skills.

There's one other big factor driving up the interest in lifetime training: Americans told Pew they feel uneasy about the workplace, even when they view their own jobs as secure. They see American jobs as less secure, more pressured and less rewarding than in the past.

(Paradoxically, 88 percent of survey respondents said they don't believe it's too likely they will lose their own jobs in the coming year.)

The general angst of workers is driven by perceived threats coming from several different directions: declines in union membership, increase in foreign-made products sold in the U.S and outsourcing of jobs, among others. The recessions of 2001 and 2007-09 set back savings and earnings potential for many. At the same time, many employers cut back on their health and pension benefits, adding to American workers' financial insecurity.

Another precarious trend: the loss of traditional employment arrangements. While full-time jobs are still the norm, a growing number of working Americans are no longer employed full-time. Contingent workers must always be on the lookout for their next gig, and that places an extra burden on them to keep their skills fresh and updated at all times.

Understandably, this sense of vulnerability is strongest among workers with no college education and lower-than-average household incomes. Less-educated workers are the most likely to say that their jobs are imperiled: Roughly 38 percent of workers with no college experience said they lack the education and training to get ahead in their jobs, compared with 27 percent of those with a bachelor's degree.

And 39 percent of those without a high school education said it is very or fairly likely they may be laid off within 12 months, compared to only 7 percent of those with a bachelor's degree or more.

Add this all up and and it's no surprise that so many believe keeping skills fresh and current must be a priority throughout a career.

So by now you must be wondering, "What type of training should I pursue?" While the Pew report does not specifically address that question, as a longtime career coach, let me offer three points to consider:

1. A mixture of technical and soft skills is critical for success. Over 80 percent of respondents said they believe it's important to have strong computer skills; the ability to work with those from diverse backgrounds and strong training in writing and communications. I agree.

You can find these types of course offered through adult education programs, online classes and sometimes even through training programs at work. Look for them and enroll.

2. Certification programs are viewed favorably. Some 78 percent of Americans told Pew they think these programs prepare students well for a job in today's economy. I agree with them, too.

Community colleges and industry associations are good resources for locating certificate training.

3. The responsibility for preparing and succeeding in today's workplace starts with you. No matter what type of training you pursue, here's one point that virtually everyone Pew talked to agreed on: It's up to you to make sure you remain competitive in today's workplace.

I couldn't agree more.

The report reveals that 45 percent of employed adults said they got extra training to improve their job skills in the past 12 months. Isn't it time you decided to join their ranks?

© Twin Cities Public Television - 2016. All rights reserved.

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Are baby boomers working longer and harder? | BoomerCafé

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If you're still a working baby boomer, do you feel like you're working longer and harder? If so, you're not alone. Career coach Nancy Collamer blogs for our friends at NextAvenue.org, and she has dug deep into a new report about the State of American Jobs. You might see yourself in it.

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Baby Boomers - Facts & Summary - HISTORY.com

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Find out more about the history of Baby Boomers, including videos, interesting articles, pictures, historical features and more. Get all the facts on HISTORY.com

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https://www12.statcan.gc.ca/census-recensement/2011/as-sa/98-311-x/98-311-x2011003_2-eng.cfm

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How do we back fill Retirees?

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Recruitment & Staffing Association of Australia

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Ted & Greg Talk | 5.0 The Baby Boomer Question

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In this video Greg Savage and Ted Elliott discuss one of the impending challenges and contributory factors in the upcoming talent shortage: the exit of baby boomers from the workforce. Greg notes strategies in managing potential staff shortages from the perspective of recruiters.

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a person born in the years following World War II, when there was a temporary marked increase in the birth rate.