Federal Reserve Board Chairman Ben Bernanke warned members of the Senate Budget Committee that they face tough choices about the country’s finances.

“Because of increasing life expectancy and the decline in fertility, the number of retirees that each worker will have to support in the future–either directly or indirectly through taxes paid to support government programs–will rise significantly,” Bernanke said, according to a written version of his remarks.

Simply balancing the budget will not be enough, in part because a country with a balanced budget in which 20% of gross domestic product goes to government spending is very different from a country with a balanced budget in which 40% of GDP goes to government spending, Bernanke said.

In addition, “the annual budget deficit reflects only near-term financing needs and does not capture long-term fiscal imbalances,” Bernanke said.

Congress has to pay close attention to growth in unfunded liabilities at the Social Security and Medicare programs, Bernanke said.

“Policies that promote private as well as public saving would also help us leave a more productive economy to our children and grandchildren,” Bernanke said. “In addition, we should explore ways to make the labor market as accommodating as possible to older people who wish to continue working, as many will as longevity increases and health improves.

Links to the written version of Bernanke’s speech and a video recording of the speech are on the Web at Document Link