More retirees expected, and fewer working Americans to support them

From the US Census Bureau comes a dry, statistical document of potentially explosive import for the future of the United States. This report, dealing with the changing age structure of the American population, makes these key points:

* The number of young children up to the age of 13 in the United States is steadily dropping; there are 6 million fewer now than in 1970.

* The number of Americans 65 and over is steadily growing -- up nearly 5 million since 1970.

Down the road, in other words, there will be fewer working Americans to support, through transfer payments such as social security, more elderly Americans in retirement.

"We are going to insist," says economist Arthur M. Okun, "that all people in this society eat and are sheltered."

How will the nation pay for this generally supported policy?

Already pressures are mounting, evidenced by next year's hefty scheduled increases in payroll taxes, to keep social security trust funds solvent in years ahead.

"Dramatic changes," says Alice M. Rivlin, director of the Congressional Budget Office (CBO), "are still well down the road -- [the year] 2010 and following, when the postwar baby boom reaches retirement.

"Through the next decade or so," says Dr. Rivlin, "given reasonable economic growth, we should be able to provide a constant level of benefits to the elderly."

The risk, she continues, is that high expectations of retirement benefits might be aroused, which no longer could be fulfilled when today's young adults -- swelling the US labor force to record size -- enter retirement.

Today, reports the Census Bureau, there are nearly 15 million more Americans aged 18 to 34 -- the grown-up babies of the post-war boom -- than there were in 1970.

Their income and social security taxes, fed into the stream of income flowing to elderly and disadvantaged Americans, provide a cushion of time and money, before the full brunt of demographic change hits the United States.

Even that comparative cushion hides a hard reality -- that millions of families are saving less money and are forced to rely on two incomes to keep from falling behind in the battle against inflation.

In the last quarter of 1979, reports the US Department of Commerce, Americans saved 3.3 cents of each dollar of after-tax income, less than half the average during the period 1970-75.

Putting all this in perspective, says Dr. Okun, "it is possible to reach one optimistic conclusion, one pessimistic, and both are half right."

Optimism comes in the fields of teen-age unemployment and of productivity, both of which should be helped by the sharp decline in the number of preteen Americans.

"One reason for sagging productivity," says Dr. Rivlin, "has been the large inflow of inexperienced people into the labor force -- teen- agers and women.

Clearly, experts agree, this cannot be done solely through the accustomed channels of social security for all older Americans and of welfare payments to ill or disadvantaged people.

"We need," says Dr. Okun, "to find more innovative ways to phase people out of working life, possibly through postponement of the retirement age."

A "sliding scale" of social security benefits might be adopted, said Dr. Okun , a senior fellow of the Brookings Institution, "with the discount greater than it now is for taking the 62-year-old [early social security] option."

Given the "enormous costs" of nursing homes, he foresees another type of retirement environment, in which "younger elders" -- people in their late 60s -- help very old members of the community.

"The vast number of teen-agers," she adds, "will not reoccur, and the pace of women coming in should slow down. So the 1980s will see a more experienced work force, which should be good for productivity."

The phenomenon of increasing longevity, says Dr. Okun -- if considered in isolation -- can lead to pessimism when one confronts the problem of transferring enough income to nonworking Americans to keep them from hardship.