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Health & Fitness

A Boomer Driven Train Wreck

Public policy experts debate the sustainability of Social Security, Medicare, and Medicaid as the baby boomer tsunami washes up on the shore of eligibility at the rate of roughly 10,000 a day.

Public policy experts debate the sustainability of Social Security, Medicare, and Medicaid as the baby boomer tsunami washes up on the shore of eligibility at the rate of roughly 10,000 a day.

 A  study published in JAMA Internal Medicine reported that a sample of the baby boom generation, the 78 million Americans born between 1946 and 1964, were less healthy than many of their parents. Despite a supposed penchant for healthy living, it seems that boomers  have higher rates of hypertension, diabetes, obesity and high cholesterol than members of the previous generation.

Comparing boomers to their parents, researchers found that 7% of boomers use a cane or other device to aid mobility versus 3% of the previous generation; 13% of boomers have some limitations relative to everyday tasks like walking up stairs or mowing the lawn compared to 8.8% of their parents. And the leading edge of the boomer wave is but a “young” 67 this year!

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Doctor Dana King  of the West Virginia School of Medicine said, “Baby boomers are living longer, so I think there may be presumptions from that they are the healthiest generation. But they are not in excellent health while they are waiting around to live two to three years longer. Unfortunately they may be living longer with a greater burden of chronic disease, and more disability. It’s not exactly a good public health outcome.” (Source: “Baby Boomers: Not the Healthiest Generation,” Alice Park,  2/5/13,TIME.com)

Seventy-five percent of boomers suffer from hypertension with significant cardiovascular damage implications versus 35% of their parents who had high blood pressure. A greater portion of the population is more overweight or obese than before, triggering  complications. We turn to drugs and surgical solutions rather than treat root causes. All of this increases medical costs while other data foreshadows a fiscal train wreck as more boomers become eligible for government benefits.

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In 1941, 41 workers supported each beneficiary enrolled in Social Security. The ratio today is 2.9 workers per retiree; the ratio is expected to drop to 2 workers per recipient by 2030. In a May 22, 2012 report on Social Security issued by the Mercatus Center at George Mason University, Veronique de Rugy declared, “The program was stable when there were more than 3 workers per beneficiary. However, future projections indicate that the ratio will continue to fall from two workers to one, at which point the program in its current structure becomes financially unsustainable.”

There has been an explosion in Social Security disability claims, as witnessed by the increased number of commercials on cable television touting the services of disability claim lawyers. In 1992 one person was on disability claim status for every 35 workers. Now it is one for every 16.

A report in The Wall Street Journal indicated that white American college educated women, what the paper sees as “a good proxy for the middle class,” has a fertility rate of 1.6. The overall  fertility rate in the U.S. is 1.98. The replacement rate is 2.1. (Jonathan V. Last, “America’s Baby Bust,” 2/213). If our population is not growing, where will the future supporters of those on government benefits come from?

Boomers need to pay more attention to the link between health and wealth. The pursuit of fitness and healthy eating is more than an exercise in physical wellbeing—it is a smart financial strategy! While we do not know to what extent government benefits will be paired back, reality says they will. Pressure will continue relative to raising taxes on workers to support an expanding pool of benefit recipients. The math is inescapable.

Build your nest egg. Get insurance while you are healthy and can qualify. Allocate a prudent portion of your investment dollars to inflation hedges that produce growing income streams. Making one percent gross of taxes while inflation is at 2 or 3 percent is not going to support longevity—especially if you live longer but sicker! See government benefits as a “high side plus”, not a retirement and health care plan!

Lewis Walker is President of Walker Capital Management LLC. and Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA).  Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with the Walker Capital Companies.  3930 East Jones Bridge Road ▪ Suite 150 ▪ Peachtree Corners, GA 30092 ▪ 770-441-2603 ▪ lewisw@theinvestmentcoach.com

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