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Originally Posted by papad622
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I would suggest your read Gregory Mankiw
et al.
True, they were written in the late 1990s, and while the data might be a bit out-dated, the issues are not.
There's an issue with the 41,466 housing markets in the US.
Boomers have an higher percentage of home ownership than other Generations. It is not because Boomers are smarter or superior or more well-off, it's because it was beat into their brains that if you don't own a home, you're
persona non gratis.
Boomers also have an higher percentage of 2nd homes, and I mean 2nd homes and not rental properties.
So, clearly, between now and 2045 there will be a glut of, um, "used" homes on the markets.
In some of those 41,466 housing markets, the Supply is fixed, meaning you have to wait until someone dies or moves to get a house there (unless you want to commit Arson), and Demand is high, or increasing, or both.
A glut of housing will have virtually no impact on prices.
About 30,000+ housing markets are at equilibrium, so worst case scenario is prices stagnate for a decade; best case scenario is modest increases in home values. If you thought your home would double in value in 10 years, that ain't gonna happen there.
Several 1,000 housing markets are in Micropolitan Statistical Areas (MMSAs not MSAs). They will take a hit with depressed home prices.
A example of an MMSA is Salem, Ohio (which borders the Akron MSA). The demographics of those areas are already top-heavy with the 50+crowd, because you don't pick up and move for a new job at age 50. That's something you do at age 30 or 40 (unless there's a gun pointed at your head).
They've been hemorrhaging people at rates of 20% every 10 years since 1960, and that MMSA in particular because it did not make the transition to mechanical agriculture very well in the 1960s and then industry -- foundries, steel mills, rolling mills, auto plants, auto parts plants, and the rubber and tire industry -- crapped out in the 1970s and 1980s.
Housing prices are already low, and they'll go lower through 2045.
Stocks are another issue.
Boomers own more stocks, not because they're smarter or superior or more well-off than other generations, rather because they came of age at a time when the Ponzi-scheme union- and corporate-based defined pension benefit plans crafted by mob accounts to launder money for the 27 MAFIA families and the 100s of
capo regimes went by the way-side.
The alternative was 401(k) (pronounced "
stocks").
The question is whether Boomers will spend down their 401(k) plans, or not. I suppose it's more of a sociological question than an economic one and a lot of that will probably rest on how their Will is structured (assuming they have one.)
I suppose if Boomers all died on the same day, it might actually impact the "Stock Market" but since that isn't going to happen, it's a nothing-burger.
The only other issue would be medical.
The HI (Medicare Part A) Trust is scheduled to go **** up in 2026. Of course, the Trustees knew nothing of STUPID-19, which did two things: significantly reduce HI tax revenues and result in increased spending by Medicare. Things are looking up, but hospitalizations by the elderly are still high, so it's likely to go bust 2023-2024. You'll need to at least triple the HI tax rate to get it solvent and keep it solvent over the long-term, and increased payroll taxes reduce both net economy and disposable income.
If you couple that with the fact that Social Security is about to assume dying cockroach position soon, and you'll have to increase the FICA payroll tax from 6.2% for employer and employee to 8.2%-8.4% for employer and employee, and the fact that will decrease both net income and disposable income, the economy could stagnate for a bit. Not collapse, and not go into a recession (although that might be a possibility), just stagnate with marginal GDP growth.
Medicaid is a joint State-federal program (although the government ponies up most of the money).
The issue with Medicaid is long-term care, whether that's in a nursing home, assisted living or in-home care.
If you're wondering why people who own homes qualify for Medicaid, it's because you can if your home value is under a certain amount.
However, depending on your State, you might have to forfeit your home when you die, so that means your children (or others) won't be inheriting it.
Fortunately, it may be possible to protect your home, if you act soon enough, and you'll need legal advice to do that properly.
Because this is specific to each State, and because it is also specific to each individual set of circumstances, there is no way to discuss it in generalities, because that would only mislead people.
In-home care is preferable to long-term care, because spending $1,600/month for a home health-aide to come round a few hours a day several days a week is a helluva lot cheaper than $6,000/month for a nursing home.
Even so, we ain't talking chump-change here. We're talking $100 Billion to $200 Billion extra each year, which means you'll have to raise taxes, or cut spending in other areas, or deficit spend to pay for it.
Those are just some of the things you can look at.