Retiree numbers are increasing

Baby boomers have tended to have fewer children than their parents — a trend that's continued with each subsequent generation — meaning there aren't enough Gen Xers and millennials to fill out the workforce and balance against the number of retirees.

On average, the U.S. workforce has gotten older, as Americans are often working into their 60s and 70s, meaning the baby boomers' exit from the workforce has been slowed. In 1984, people under 40 made up 60% of the workforce, but today that number has dropped to 45% while the percentage of workers over 60 has doubled.

An increasing number of retirees will lead to an increased demand on healthcare services, Fowers and Schaul report. While the healthcare industry is projected to create more jobs than any other industry this decade, care shortages already exist and are likely to worsen as the number of people who need care increase while the number of caregivers either remains the same or decreases.

The cost of long-term care in a society that's getting older "keeps me up at night," said Gopi Shah Goda, an economist at Stanford University.

"Long-term care is one of the biggest expenditure risks that faces the elderly population," Goda said. Since services like long-term home healthcare aren't typically covered by Medicare or other insurance, Goda added, "people impoverish themselves paying for long-term care until they're eligible for Medicaid, which does cover long-term care services."

And if older Americans can't afford care, the burden typically falls to relatives. Around 1 in 5 adults in the United States provide ongoing support to friends or family members, according to a 2021 poll from KFF. This work can often lead to financial strain, health issues, and people leaving the workforce.

What can be done

Preparing for more older Americans to exit the workforce will require congressional action on issues like immigration and entitlement programs, Fowers and Schaul report.

"It's a hydra of a numbers problem," said Kathryn Anne Edwards, an economist. "And we're not trying to handle any of those heads."

An increase in the numbers of immigrants could help fill out the number of working-age Americans, as immigrants on average are younger than Americans and the main contributor to the country's population growth.

Increased immigration can also lead to better outcomes for people needing long-term care, according to research from the Cato Institute and the National Bureau of Economic Research.

By 2033, Social Security will not be able to make full retirement payments without congressional intervention, but the program hasn't been legislatively addressed in 40 years. Lawmakers will be faced with the choice of either reducing benefit payments, increasing the retirement age, or raising taxes.

"We've known for 75 years now that we had a really large birth cohort," Edwards said. "Many of the quote-unquote problems related to that aren't from their numbers. It's problems that come from us not making policy to address what those numbers would mean." (Fowers/Schaul, Washington Post, 7/1)

The healthcare industry is facing a looming challenge: an aging population with an ever-growing demand for care. Achieving equitable, sustainable care requires a shift in how we pay for and provide care to older adults. This report outlines five key insights from our senior care research and their implications for stakeholders across the industry. Read on to find out how you can equip your organization to address the new landscape.