The American Council of Life Insurers is praising efforts by President Bush to prepare the federal government for the looming retirement of U.S. workers born between 1946 and 1964.
The president asked lawmakers Tuesday during his State of the Union address to establish a commission that will study the effects of the baby boom generation on Social Security, Medicare and Medicaid.
The oldest baby boomers will turn 60 this year, and Bush reminded his audience that he and former President William Clinton are 2 of the boomers who are about to hit that milestone.
“The retirement of the baby boom generation will put unprecedented strains on the federal government,” the president said. “By 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60% of the entire federal budget.”
As a result, the president said, future congresses will be forced to choose between slashing spending in other areas of government and reducing benefits paid to the elderly.
Noting that Congress declined to act on Social Security reform proposals in 2005, the president said the new reform commission should include members of Congress of both parties and offer bipartisan solutions.
“We need to put aside partisan politics and work together and get this problem solved,” the president said.
ACLI President Frank Keating says the president “is on the right track in calling for a review of the issues our nation will face prompted by the upcoming retirements of 78 million baby boomers.”
This year, the ACLI will be promoting a proposal to help Americans obtain annuities, which are “the only financial product that can guarantee an income throughout retirement no matter how long a person lives,” Keating says.
Making the tax cuts enacted in the past few years permanent could help boomers save more for retirement, Keating says.
Keating cites a key provision in the tax laws passed during the Bush administration that allows workers over 50 to contribute extra “catch up” amounts to their 401(k) plans.
“This has been especially helpful to baby boomers who are trying to prepare financially for their rapidly approaching retirements, and working women who are the most likely to have been in and out of the work force during their working lives,” Keating says.