James Glassman, a former undersecretary of state and Washington Post writer and television host, and current columnist for Kiplinger’s Personal Finance, told the more than 500 attendees at the Insured Retirement Institute’s marketing conference in New York on February 22 that while the U.S. economy grew at an annual rate of 3.5% from 1960-2003, moving forward growth will more likely average 2%, or even less. Glassman suggests that growth will be hindered by the country’s growing debt–”It’s more difficult to move ahead if you’ve got this big load on your back”–and by changing demographics, most notably the fact that “the young cohort won’t be big enough to support the older cohort,” as evidenced by the shrinking worker-to-retiree ratio, which stood at 45 workers to each retiree in 1945 and was 5 to 1 by 1960, and which now stands at 3-1, with the consensus projection of there being a two-to-one ratio by 2030.
While admitting that this ratio could change if Americans start retiring later and if immigration increases, and that “history is not a perfect guide to the future,” nevertheless Glassman predicted that “we’ll never get back to 5-1, much less 16-1.”
There’s another reason why growth will moderate, he says: lack of political will to force Americans to take more responsibility for their own retirement. He says healthcare reform has been rejected because Americans “think government doesn’t do a good job of fixing things,” and “because it costs too much.”