Benefits - Retiring Early, Living Longer, A Burden On The Middle?

The ratio between the size of the workforce-aged population and the combined young and old population is called the dependency ratio. The higher the dependency ratio the greater the burden on society to support its more dependent sectors. Though it is true that not all youth or elderly people need support and not everyone of working age works, this ratio is a measure of the population's ability to support those not in the labor force.

The graph presents the U.S. dependency ratio for more than a century. Figures are presented for the youth dependency ratio (those aged 0 to 20 per 100 aged 20 to 64), the elderly dependency ratio (those aged 65 or older per 100 aged 20 to 64), and the combined dependency ratio. In 1980, for example, there were 20 people aged 65 or older for every hundred people aged 20 to 64.

What the graph clearly shows is the trend towards a steadily growing elderly dependency ratio and an increasing total dependency ratio into the 21st century. These ratios tend to be cyclical. Their peaks have traditionally occurred during periods of population growth. The mid-century Baby Boom is seen clearly in the data for 1960 and 1970, each showing growth rates for the preceding decade. The new trend in the dependency ratio arises from the increasing percentage of this "dependent" population that is in the 65 and over age cohort. The elderly portion of the dependency ratio is growing steadily and will continue to do so through the early 21st century.

In the previous panel we saw that the average age of retirement is declining. As of the year 2000, the average age of retirement was 61.5. If, to the dependency ratio data presented here, we make the necessary alterations to more accurately reflect all retired people, instead of only those over the age of 64, the dependency ratio will increase even more rapidly.

The Social Security system was established as an insurance policy that would provide us with a small income in retirement. In order to assess our ability as a society to support our expanding period of retirement, we should look next at projections for this system.

Source: Population data for 1900-70: U.S. Bureau of the Census. Historical Statistics of the United States, Colonial Times - 1970. Series A29-49 p. 10. Population data for 1980 and projections to 2030: U.S. Bureau of the Census. Annual Projections of the Resident Population by Age, Sex, Race, and Hispanic Origin: 1999 to 2100. Online. Available: http://www.census.gov/population/www/projections/natdet-D1A.html