Caring for a Growing Elderly Population Is a Growing Problem
How the young will support the old in coming
years remains the biggest challenge for the social systems both in the United
States and abroad.
According to a recently published USA
Today analysis, the United States faces massive costs for Social
Security and medical care in the next 70 years. In fact, the pricetag could
reach nearly $43 trillion.
And this is an issue for countries around the
globe. In Japan, for example, the number of people age 65 and above today is
equal to about one-fourth of those in the much wider age range of 15 to 64. As
a result, the financial challenge American taxpayers face in supporting older
citizens is echoed in many other nations.
Some countries, including Sweden, which is always
a leader in social planning, have taken early steps to manage the cost of
healthcare and retirement for their aging population. They have retooled
retirement plans, tying benefits to contributions, raised retirement ages and
increased taxes. Furthermore, they have reined in healthcare costs. Social policies
that mirror these in the United States, of course, are part of the growing
political debate on domestic issues, but they are overshadowed by the more
ominous war-talk in this election.
According to USA Today, only a few countries
have other weapons to combat the costs of an aging population. Spain, for
example, has relatively few women in the workplace. Adding them to the labor
force would increase the number of workers supporting the elderly. Norway uses
oil revenue from the North Sea to offset the cost of national healthcare and
pensions. Still other countries with low birth rates are urging people to take
more vacations and have more children.
Other developed nations are trying a mix of
raising taxes, increasing the age at which people start collecting benefits, and
requiring individuals to save on their own. Here's what USA Today found
they do:
• Delaying retirement age.
Some European countries allow retirement at 60 or even earlier. In Italy , for
example, people can retire at 57 and collect full benefits if they have worked
35 years. The Italian government is pushing to raise the retirement age but
faces opposition from unions.
• Tying benefits to contributions.
Many plans abroad base benefits on a percentage of a worker's salary. Wages
typically rise faster than inflation, so this method leads to a rapid increase
in benefits.
• Paying off other debts. A
country with a budget surplus is better equipped to meet its liabilities than
one with a large deficit, such as the United States . But when a country runs a
large surplus, political pressure mounts to return the surplus to taxpayers.
Case in point: Norway , with a budget surplus equaling 12% of its gross domestic
product, approved a three-year, $3.5 billion tax cut in 2002.
In all countries, the wild card is the changing
cost of healthcare. As populations age, more people need more care, and fewer
workers pay into the healthcare system. In some developed nations, “universal
health coverage” has been implemented, providing citizens with cradle-to-grave
healthcare that is financed by taxes instead of private insurance.
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