The Coming Generational Storm

By Lawrence Kotlikoff

“In 2030, as 77 million baby boomers hobble into old age, walkers will outnumber strollers; there will be twice as many retirees as there are today but only 18 percent more workers. How will America handle this demographic overload? How will Social Security and Medicare function with fewer working taxpayers to support these programs? ” This is the central premise behind the Coming Generational Storm, by Lawrence Kotlikoff.

According to Kotlikoff, “If our government continues on the course it has set, we'll see skyrocketing tax rates, drastically lower retirement and health benefits, high inflation, a rapidly depreciating dollar, unemployment, and political instability. The government has lost its compass and the current administration is heading straight into the coming generational storm.”

This book details the issues surrounding the severe generational imbalance, which comes as a result of the Baby Boomers being the last American generation to be more numerous than their parents. Additionally, younger generations are giving birth at a far lower rate and at an increasingly older age. Society at large will soon have to face the issues that are pertinent to older people such as health care.

Unfortunately, generational imbalance will cause Social Security, Medicare and Medicaid to become bankrupt. Kotlikoff believes the coming economic crisis will obliterate the value of the dollar and stocks and bonds will collapse.

The author presents solutions, however. Make workers work longer, massively tax the working generations and print money to dilute financial obligations. None of these “solutions” are exactly positive developments. If the governments do implement ideas such as these, the markets will still meltdown. Such a situation is unprecedented therefore we may see a disaster of a magnitude never seen before.

I certainly hope Lawrence Kotlikoff is wrong. Unfortunately, his explanations make complete sense. The good news is that there are ways to prosper even in the worst markets. A person that will short stocks can become fantastically wealthy even as others are losing everything. It just takes courage to look for coming trends and act upon them. Reading the Coming Generational Storm is an excellent way to understand and prepare for what the future holds.