Demography and Retirement: The Twenty-First Century

By Anna M. Rappaport; Sylvester J. Schieber | Go to book overview

Robert J. Myers

Dr. Clark has presented a very interesting and important paper on population trends in six countries over the next 35 years as they affect retirement policy under social security systems and private pension plans. It is somewhat unfortunate that the data do not relate to the next 40-50 years, because the upward trends shown will not possibly have reached their fruition in as short a period as 25 years.

Age 65 is used as the borderline between the two categories, working population and aged population. Then, two measures of the extent of aging of the population are used, namely, the population aged 65 and over as a percentage of the total population and also as a percentage of the population aged 20-64. On the whole, the latter seems a somewhat better measure as to the financial burden of the retired population on the working population. Perhaps, however, it might have been better to have a variable, and increasing, age borderline over the years.

The extent of aging of the population shows somewhat the same general picture in all countries except Japan. Thus, in the five other countries involved, the aging situation shows a plateau in 1980-2000 and even until 2010 in France and the United States, and thereafter accelerates sharply in the remaining years up to 2025. This is a clear reason why consideration of demographic problems should not be myopic and be confined to only a few near- future years. Future prognostication of most elements in our social and economic lives is fraught with uncertainty, but this is certainly not the case as to the age structures of populations.

Although Dr. Clark did not point out the special situation in Japan, I believe that such is clearly present. Specifically, no plateau in the aging trend occurs in the 1980's and 1990's, but rather a significant steady upward trend is present. The likely reason for this is that Japan was a very high- mortality country before World War II and after then had a quite sudden improvement in mortality (in part as a result of public health measures sponsored by the military occupation). As a result, the effect of rapidly declining mortality at all ages resulted in steady increases in the aging of the population.

Dr. Clark well points out that the aging of populations is due both to decreases in fertility and to reduction in mortality at the older ages. I might point out, however, that reductions in mortality at the younger and middle ages also add to this effect, because a greater number of people then live to old age. Also, it is interesting to note that in the past decade a small, but significant, increase in fertility has occurred in the United States and in some other countries; this can have some counteracting effect on the aging of the population in the future.

Quite obviously, the aging of the population in all of the countries considered will put serious financial strains on their social security programs and their private pension plans. A somewhat partial offsetting effect is that, with fewer children, there will be lower child-support costs. In my opinion, the solution to the unfavorable cost effect of the aging trend is clearly to raise the Normal Retirement Age (the age at which full- rate benefits are first payable). Japan and the United States have already done this, and further action in the former country

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Demography and Retirement: The Twenty-First Century
Table of contents

Table of contents

  • Title Page iii
  • MEMBERS OF THE PENSION RESEARCH COUNCIL v
  • Purpose of the Council vii
  • Contents ix
  • 1: Overview 1
  • Introduction 1
  • 2: Demographic Change in the United States, 1970-2050 19
  • ENDNOTES 47
  • Stephen C. Goss 53
  • Barry Edmonston 57
  • Introduction 57
  • 3: Expected Changes in the Workforce and Implications for Labor Markets 73
  • Introduction 73
  • Joseph F. Quinn 105
  • 4: Can Our Social Insurance Systems Survive the Demographic Shifts of the Twenty-First Century? 111
  • Introduction 112
  • ENDNOTES 148
  • 5: The Impact of the Demographic Transition on Capital Formation 163
  • Introduction 163
  • ENDNOTES 180
  • Alicia H. Munnell 183
  • 6: Implications of Demographic Change for Design of Retirement Programs 189
  • 7: Trends in Health Among the American Population 225
  • Introduction 225
  • ENDNOTES 242
  • Discussions 243
  • 8: Population Aging and Retirement Policy: An International Perspective 255
  • Introduction 255
  • ENDNOTES 284
  • Robert J. Myers 293
  • Bibliography 297
  • Index 315
  • Contributors 323
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