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Where will money to support retirees come from?

A number of items that appeared in the news in recent weeks form a troubling trend for retirees, current and future, and for communities that depend heavily on retirees for their financial stability.

The first was a report that the nation's birth rate is shrinking and last year hit a record low, indicating, as one expert said, that America is increasingly a society of senior citizens and less of young people.

"That's a pretty big deal, and it's going to play out in all sorts of powerful ways for many years," Paul Harrington, a population expert at Northeastern University in Boston, told the Los Angeles Times.

As the tide of baby boomers begins to retire, the decline in birth rates means there will be even fewer native-born workers to support each retiree, he said. He believes the trend will mean an increased reliance on immigrant workers to meet the nation's retirement costs.

With a shrinking labor force forecast for the coming years, an examination of that work force is in order. It's not a pretty sight.

Unemployment is at record highs, with more than 9-million Americans now out of work. Experts had predicted that job losses in May would be around 17,000. The real number, as reported on Friday, was 70,000.

So, the work force that is being counted on to support the looming tidal wave of baby boomers is becoming smaller and smaller. But wages and salaries are rising to offset that gap, right?

Wrong. Not only have wages stagnated in many private sector areas, the rising costs of health care and other necessities have millions of workers, those fortunate even to have jobs, taking backward financial steps.

Factor in a little-noticed effort in Washington to make it easier for businesses to work employees longer hours without having to pay overtime compensation. The Bush administration is supporting revisions to the federal Fair Labor Standards Act that will broaden the definitions of exempt "professional, administrative and executive" workers, said Ross Eisenbrey of the Economic Policy Institute, an independent research organization.

These changes, if approved, will allow companies to avoid paying overtime to workers simply by labeling them executives. This would cut costs to businesses while forcing employees to work many more hours simply to keep pace with their current wage level.

The social impact on American families would be drastic. Eisenbrey noted that women, for example, are working more hours per week and more weeks per year than they did even 10 years ago. Middle-class married couples with children now work an average of 98 weeks a year.

The picture is getting clearer. A smaller number of people competing for scarce jobs will be highly stressed, with the predictable impact on their families, as they work more hours for less money in order to support not just their own families, but the retirees who are counting on them to keep the entitlement funds solvent.

But those funds, including Social Security, the backbone of the economy in retirement-oriented communities, are in fine shape, right?

Again, wrong.

The government's most recent estimates show that by 2018, the Social Security trust fund will begin spending more money than it takes in. The trust fund that pays Medicare's hospital bills is expected to do a little better, lasting until 2026.

Those gloomy forecasts are from the annual report of the trustees who monitor the fiscal health of the Medicare and Social Security systems.

The report echoes the predictions of other experts by noting that Social Security and Medicare will face crippling financial strains in the coming decades because longevity is increasing, and the 77-million-strong baby boom generation will begin to draw on Social Security in eight years. Combined with dropping birth rates, those trends mean there will be too few workers paying taxes toward benefits for retirees.

What will a shaky Social Security system mean for this region? The latest census information shows that about half the households around here receive Social Security payments, and the number of households collecting other retirement income is about 35 percent.

With more than half the households relying to some degree on Social Security to get by, and with that number expected to increase, the outlook becomes more grim. This doesn't even take into account the shaky stock market and the evaporation of many retirement accounts brought on by the recent wave of corporate accounting scandals.

But surely prudent steps are being taken at the highest levels of government to ensure that our citizens, young and old, will avoid these looming catastrophes, right?

Strike three, you're out.

Actually, the federal government is going strongly in the opposite direction, loading up deficits on the coming generations of workers as far as the eye can see.

A recent report by the Committee for Economic Development, an organization of corporate CEOs and civic leaders, noted, "All told, the new budget proposals would raise the 10-year deficit by about $2.7-trillion and annual deficits 10 years from now by about $500-billion." Those estimates do not take into account the tax cuts recently approved in Congress or the costs of the war with Iraq and its aftermath.

"Staying on our present track, spending for Social Security, Medicare and Medicaid skyrockets, while revenues fail to keep pace," the report stated, adding, "Perhaps for the first time in this country's history, most Americans could no longer expect their children and grandchildren to have higher living standards than their own."

The nation's tax structure will adjust accordingly, though, ensuring that revenues will keep pace with the expected needs. Correct?

Ahem, strike four.

A barely noticed report from the IRS last month showed the true current trend of taxation. The report noted that tax inequities are becoming the norm and included the astonishing fact that in 2000, a record number of wealthy people in America paid no income taxes at all.

The IRS reported that more than 2,000 of the nation's richest people avoid paying any income taxes, a jump of 45 percent from the previous year. The agency also found that the wealthiest people overall paid a lower proportion of their income in federal taxes in 2000 than in 1992.

Perhaps it is just playing Chicken Little to look at these expert reports and conclude that economic disasters lie in store for communities like ours, where the economy depends so heavily on the retirees who have traditionally flocked here, and on the low-paying workers in the service industries that cater to the retirement market.

Or maybe it is a realistic, and frightening, assessment of our economic future.

_ Greg Hamilton is editor of editorials for the Times' Citrus County edition.

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