The General Accounting Office announced Tuesday that today's projected budget surpluses will be overwhelmed by the baby boom generation when it hits retirement. "Without a change in entitlement programs, demographics will overwhelm the surplus and drive us back into escalating deficits and debt," said David Walker, comptroller general.
Mr. Walker also questioned the likelihood that the projected budget surplus of somewhere around $5.6 trillion over the next 10 years would actually materialize.
The first wave of baby boomers, now approaching their mid-50s, will start joining the retirement rolls in 10 years. The number of retirees will continue to swell starting in 2011. Walker projects that three-quarters of the federal budget will go towards funding programs for retirees. If current programs remain in place, Walker estimates that "During the 2040s, the government would do nothing but mail checks to the elderly and their health care providers."
None of this comes as any surprise to economists and financial advisors who have argued that the projected federal surplus needs to be used in part to pay down some of the nation's debt and in part invested now in order to meet the future needs of the tidal wave of retirees who are literally just around the corner.