Visit the conference website and watch streaming video of the event. Reengineering Social Security in the New Economy , by Thomas F. Siems, January 23, 2001. Baby Boomers thinking they can ignore the looming Social Security crisis because of a hoped-for windfall from their parents are bound to be disappointed, says a new report from the Federal Reserve Bank of Cleveland . Authors Jagadeesh Gokhale and Laurence Kotlikoff outline three main reasons these windfalls may not be all that many boomers expect. First, while today's seniors are the wealthiest generation in history, that wealth must be divided up among the baby boomers, who are the largest generation in history.
More heirs means less inheritance per person.
Second, a large amount of today's seniors' wealth is effectively annuitized. That is, it provides income that ceases at their death. In 1960, for instance, males over 65 had approximately 16 percent of their financial resources annuitized through defined-benefit pension plans, Social Security and Medicare, and other pension plans. By 1990 that figure had grown to 41 percent, and will likely grow even higher. Third, today's seniors are spending down their wealth at over twice the rate of those in the past.