STEVE INSKEEP, host:
This is MORNING EDITION from NPR News. I'm Steve Inskeep.
RENEE MONTAGNE, host:
And I'm Renee Montagne.
During the first week of 1946, Alabama beat USC in the Rose Bowl. Emperor Hirohito announced he was not a god, after all. And the first baby boomers were born. Nearly 80 million more arrived before the end of 1964, the last year of the baby boom. Their influence has rippled through the culture. And in the past couple of decades, their looming retirement has buffeted American politics.
Senator BARACK OBAMA (Democrat, Illinois; Presidential Candidate): We've got 78 million baby boomers who are going to be retiring over the next couple of decades.
Mr FRED THOMPSON (Actor, Presidential Candidate): In 2017, Social Security will be in the red.
President GEORGE W. BUSH: We must pass reforms that solve the financial problems of Social Security once and for all.
MONTAGNE: Well, folks, the baby boom's retirement is no longer looming; it's here. This year, the first baby boomers will turn 62, making them eligible to claim early Social Security retirement benefits.
NPR's John Ydstie has more in this milestone for the baby boom and the implications for the nation's retirement program.
JOHN YDSTIE: America's baby boomers have often felt they were something special. They were, after all, a bumper crop of children that symbolized the hope of America, an America that had regained its footing after years of economic depression and war. They were celebrated by their parents, studied by demographers and targeted by advertisers. And the culture of their youth still lingers in the air.
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Unidentified Man #2: President Johnson's unilateral move toward the escalation of the Vietnamese war…
(Soundbite of song, "The Times They Are A-Changing")
Mr. ROBERT ALLEN ZIMMERMAN, aka BOB DYLAN (Songwriter): (Singing)…the loser now will be later to win, for the times, they are a-changing…
(Soundbite of Song, "The Ballad of Jed Clampett")
FLATT and SCRUGGS (Bluegrass duo): (singing) Come and listen to a story 'bout a man named Jed. The poor mountaineer, barely kept his family fed.
(Soundbite of movie, "The Graduate")
Mr. DUSTIN HOFFMAN (Actor): (As Benjamin Braddock) Oh, my god.
Ms. ANNE BANCROFT (Actress): (As Mrs. Robinson) Pardon?
Mr. HOFFMAN: (As Benjamin Braddock) Oh, no, Mrs. Robinson. Oh, no.
Ms. BANCROFT: (As Mrs. Robinson) What's wrong?
Mr. HOFFMAN: (As Benjamin Braddock) Mrs. Robinson, you're trying to seduce me.
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Mr. HOFFMAN: (As Benjamin Braddock) Aren't you?
YDSTIE: That was Dustin Hoffman, of course, struggling with generational issues in the movie "The Graduate."
Baby boomers have always lived in denial about growing old. Hey, 62 is the new 50, right? Except that, now, you're eligible for a Social Security check.
Ms. BETSY RASHANG (Middle School Teacher): See you, good luck.
YDSTIE: Betsy Rashang(ph), a middle school teacher from Mechanicsburg, Pennsylvania, is engaging in a very baby boom activity: trying to fend off the effects of aging in the school gym.
Ms. RASHANG: If I go and consistently go to the workout room, I might - I just feel better. I just feel better - that's all.
YDSTIE: Rashang will turn 62 this year and she has decided to retire. It's not because she's tired of her students, she says, but she'd like more time with her family and for reading and volunteering.
Ms. RASHANG: Sometimes working gets in the way of life - not always, but sometimes.
YDSTIE: Like other people who retire at 62, Rashang will get about 25 percent less in her monthly Social Security check than if she had waited until her full retirement age of 66.
Ms. RASHANG: I know that, you know, you'll receive less - that's true. But then again, life is a gamble and you don't know how long you're going to live. So…
YDSTIE: Long-term trends predict that, like the generation before them, more than a third of baby boomers will retire at age 62. But some studies suggest baby boomers might stay in the workforce longer. That makes sense since they'll remain healthier and live longer.
Steve Goss, Social Security's chief actuary, says if they did put off retirement, it could help solve the program's financial problems.
Mr. STEPHEN GOSS (Chief Actuary, Social Security Administration): From the point of view of financing of Social Security - and then, actually, even everybody's well-being, we actually would, if anything - probably encourage people, if they're able to continue working, to work a little bit longer and not retire at 62.
YDSTIE: That's because the problem for Social Security, as we've all heard before, is that the number of workers supporting each retiree will fall from a little over three to about two as the baby boom retires. Actually, that problem arises less from the baby boom than from the baby bust, says Goss. In fact, he says birthrates during the baby boom - a little over three children per woman - worth much above the historical average.
Mr. GOSS: The real change was after the baby boom - sometimes referred to as the baby bust. The birthrate drops down to a level more in the order of two children per woman. We actually reach an all-time low within the one year in 1976 of 1.7 children per woman. And that's what's really causing a big shift in the financing of Social Security and Medicare.
YDSTIE: Of course, that's the baby boom's fault. They had fewer children. But they had some help too.
(Soundbite of song, "The Pill")
Ms. LORETTA LYNN (Singer): (Singing) There's a gonna be some changes made right here on nursery hill. You've set this chicken your last time 'cause now I've got the pill.
YDSTIE: If you're a baby boomer, you might remember Loretta Lynn's controversial song. The result of the pill and the lower birthrate is that the ratio of workers to retirees will drop over the next couple of decades. In just 10 years, there won't be enough payroll taxes coming in to cover all the promised benefits. Social Security will tap its trust fund to make up the short fall. But by 2041, the trust fund will be tapped out and incoming payroll taxes will cover just 75 percent of promised benefits.
This scenario has been described as catastrophic by some politicians and critics of Social Security. Economist Henry Aaron of the Brookings Institution argues the rhetoric overstates the problem.
Mr. HENRY AARON (Senior Fellow, Brookings Institution): I think it's a mistake to focus what, in some quarters, is almost a hysterical sense of urgency on the Social Security problem and not spend as much time on the other problem.
YDSTIE: The other problem is federal health care spending. Future increases in Medicare and Medicaid dwarf the Social Security problem. Their cost will rise 300 percent over the next four decades, while Social Securities rises by 40 percent. In fact, Aaron points out, Social Security could be made installment for 75 years by increasing the payroll tax by one percentage point for workers and one percentage point for employers. That two percent solution isn't necessarily Aaron's preferred fix but it's one indication of the size of the problem.
Mr. ALAN VIARD (Resident Scholar, American Enterprise Institute): Some people probably are overstating and that's certainly not something I want to do.
YDSTIE: That's Alan Viard of the American Enterprise Institute. He aggress Social Security's problem has been overstated by some.
Mr. VIARD: It's absolutely true that Social Security has a less serious problem than Medicare, but I think it's also somewhat misleading to treat to them as completely separate. They're both going on at the same time and they both pose the same kind of challenges to us, which is that we're going to have an increasing amount of money paid in by workers and going to retirees on a pay-as-you-go basis.
YDSTIE: Viard's fix involves cutting promised benefits for everyone but the least affluent 30 percent of future retirees. He would do that by linking their initial benefit to increases in prices rather than increases in wages, as is now the case. Overtime, that would cut promised benefits dramatically, some say too dramatically.
In any case, Viard says fixing Social Security's problems are better done sooner than later.
Mr. VIARD: The longer we wait, the more likely an extreme solution becomes. I think that if we want to preserve Social Security and restore public confidence that we really do need to act quickly.
YDSTIE: For his part, Henry Aaron of Brookings agrees the sooner adjustments are made to Social Security the better. But he argues Medicare and Medicaid and the nation's health care system should be tackled first.
John Ydstie, NPR News, Washington.