You'll Be Afraid Of Older Generations After You See These Charts

In a long analysis of the effects of an ageing generation of Baby Boomers, Credit Suisse analysts led by Neal Soss conclude that the U.S. faces steep challenges in paying for a massive generation of retirees who have saved poorly.

Concerns about entitlements have formed the centre of debates on the sustainability of U.S. public debt. and this charts show just why.

First dependence on transfer payments—or the money people receive as part of redistributive government programs—has more than quadrupled in the last 50 years, while the share of income generated by wages has sunk 20 per cent:

transfer payments income

Photo: Credit Suisse

Not to mention the rising costs of social security.

In the chart below, the dotted “cost rate” line denotes the cost of Social Security programs as a percentage of payroll, which exceeded the red “income rate” in 2010. The latter line denotes the portion of payrolls that becomes tax revenue. That is projected to stay relatively steady.

In less than five years, the cost of Social Security is projected to rise exponentially as more and more Baby Boomers retire, culminating in a bubble reached around 2030-2035. The lesson: the government does not have a lot of time to get its act together before the promises it has made on Social Security begin to spin wildly out of control.

cost and tax revenue for social security

Photo: Credit Suisse

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