NIC Notes

Insights in Seniors Housing & Care

By: NIC  |  March 30, 2016

The Cost of Growing Old: Will Millennials Carry the Burden?

Economic Trends  |  Ideas and Discussion


As America ages, the U.S. economy and its macro components—Social Security, Medicare, workforce, and taxation, to name a few—will be affected. Today federal spending on earned-benefit programs such as Social Security and Medicare accounts for nearly two-thirds of the total federal budget. These programs’ expenses crowd out discretionary spending for other high-priority societal needs, including education, infrastructure, and even defense spending.

If the status quo holds, maintaining spending levels will require higher revenue from workers and businesses.

The Growth of Social Security

Social Security benefits are paid by contributions made by the current workforce. When Social Security first starting paying benefits in 1940, there were 159.4 workers for every Social Security beneficiary, and average life expectancy in the U.S. was 60. By 1950, the worker-to-beneficiary ratio dropped to 16.5:1. Today, there are fewer than three workers per beneficiary, and life expectancy has climbed to 83.


“By 2026 the tension in these numbers will become even more extreme,” said Debra Cafaro, chairman and CEO of Ventas during her NIC Talk last fall. She pointed to Medicare, a program adopted after Social Security began and that now accounts for $500 billion annually in federal spending. “Clearly this is not a sustainable situation.”

The Effect on Millennials

Millennials—those born between 1980 and 2000—are 83 million strong and are now just finding their financial footing. But by 2017, this generation will become both America’s most employed and the population with the strongest purchase power. According to a recent Bankrate survey, 62% of millennials will save more than 5% of their income this year, and 29% of this age cohort will save more than 10% of their overall income.


Coming of age during the “Great Recession,” millennials have a greater hesitancy towards incurring debt, and likewise are less consumption-focused. However, this generation has the hefty burden of accruing 1.3 trillion dollars of college debt, and entering a workforce during a period with a less-than-forgiving job market and a dramatic increase in the cost of housing. These factors have resulted in postponement of home ownership, marriage, and parenting. 

Millennials also recognize that, with the possible disappearance of earned-benefit programs past generations have enjoyed, funding of their retirements will fall solely on their shoulders. The miscalculation of life expectancy—the world’s most notable and expensive account error—will be a tab picked up by the millennials.

So with competing financial priorities and economic strain, will millennials continue to support the existing system? And at what point will millennials step up and force change? We are starting to see the power of millennial influence, just look at the presidential campaign. Baby boomers Hillary Clinton and Donald Trump both have failed to capture the attention of this audience. According to a recent article by The Hill, millennials feel they’re being left to deal with the consequences of the baby boomers’ failed policies and economic turmoil.

As Debra Cafaro lamented, “Boomers are no longer royalty in the generational kingdom. We will need to change our behaviors and our expectations.”

About NIC

The National Investment Center for Seniors Housing & Care (NIC) is a nonprofit 501(c)(3) organization whose mission is to support access and choice for America’s seniors by providing data, analytics, and connections that bring together investors and providers.

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