The ratio of workers to retirees has been steadily declining in the United States over the last several decades, and this trend has continued over the last ten years. This is largely due to demographic shifts, specifically the aging of the population as the baby boomer generation enters retirement, coupled with lower fertility rates.
Here’s a summary of the working to retiree ratio and related trends over the last ten years:
- Overall Decline: The ratio of covered workers to Social Security beneficiaries has fallen significantly. In 2000, it was 3.4 workers per beneficiary. By 2024, it is down to approximately 2.7 or 2.8, and it is projected to fall further to around 2.2 by 2050.
- Social Security Context: This ratio is particularly important for the Social Security system, which is largely a “pay-as-you-go” program. A declining ratio means fewer workers are contributing payroll taxes to support a growing number of beneficiaries, putting pressure on the program’s financial sustainability.
- Aging Workforce: While the overall ratio is declining, there’s also a trend of older Americans staying in the workforce longer.
- The percentage of Americans aged 65 and older who are still working has generally increased over the past few decades. For example, in March 2024, about 22.0% of adults 65 and older were employed, down slightly from 22.5% in March 2022, but significantly higher than the 11% in 1987.
- Workers aged 75 and older are the fastest-growing age group in the workforce.
- Factors Contributing to the Decline:
- Aging Population: The large baby boomer generation is reaching retirement age.
- Lower Fertility Rates: Fewer children are being born, leading to a smaller working generation relative to the retiree generation.
- Increased Life Expectancy: People are living longer and, therefore, collecting retirement benefits for a longer period.
In essence, while more older adults are choosing or needing to work past traditional retirement age, the sheer demographic shift of a larger elderly population and a relatively smaller younger population is driving down the overall working to retiree ratio.
QUINNSCOMMENTARY 