I know this book has provoked some discussion already. But it ("The Coming Generational Storm" by Kotikoff and Burns) raised some issues with me so I thought I'd bring it up again. The author says that there will be a huge demographic shift that includes about 600K centarians, lots of the old old, etc. which will swam social security and medicare.
My reaction is this: if the country will not be able to sustain these benefits, especially Medicare, and inflation hits, what makes him think that people will still be able to survive to these old old ages? With substandard medical care as a result, people will become sicker and die earlier. Hence, the elderly population will not end up as great as he projects. Is there some logic I'm missing here?
Also, his projections of what it will cost to fund these programs does not take into account that very likely taxation of SS and Medicare will become increasingly progressive with people receiving fewer benefits as their income increases just as happens now except even higher taxes.
Also, he didn't take into account the housing deflation, which may very well destroy a large part of people's "retirement savings."
Another thought: this "generational storm" might not result in just a financial but a social storm too. I have heard younger people already complaining about supporting people on social security. If the economy goes south because of huge entitlement liabilities, I wonder how younger people will react to living in poverty to support a huge population of us oldsters?
The author has several suggestions for action people can take: Opening a HSA and maxing out the ROTH. And owning your own home. He also has some investment suggestions.
Also, he recommends some government policy changes which, to me, sound reasonable, but difficult, given the political climate which is so devisive.
I wonder how many early retirement plans have taken this "generational storm" into account?
Here's links to the video talk if you don't want to read the book
The Video: http://mitworld.mit.edu/video/202/
My reaction is this: if the country will not be able to sustain these benefits, especially Medicare, and inflation hits, what makes him think that people will still be able to survive to these old old ages? With substandard medical care as a result, people will become sicker and die earlier. Hence, the elderly population will not end up as great as he projects. Is there some logic I'm missing here?
Also, his projections of what it will cost to fund these programs does not take into account that very likely taxation of SS and Medicare will become increasingly progressive with people receiving fewer benefits as their income increases just as happens now except even higher taxes.
Also, he didn't take into account the housing deflation, which may very well destroy a large part of people's "retirement savings."
Another thought: this "generational storm" might not result in just a financial but a social storm too. I have heard younger people already complaining about supporting people on social security. If the economy goes south because of huge entitlement liabilities, I wonder how younger people will react to living in poverty to support a huge population of us oldsters?
The author has several suggestions for action people can take: Opening a HSA and maxing out the ROTH. And owning your own home. He also has some investment suggestions.
Also, he recommends some government policy changes which, to me, sound reasonable, but difficult, given the political climate which is so devisive.
I wonder how many early retirement plans have taken this "generational storm" into account?
Here's links to the video talk if you don't want to read the book
The Video: http://mitworld.mit.edu/video/202/