Public and Private Challenges of an Aging U.S. Population

The challenges posed by the aging of the U.S. population for business and public policy are vast. They are amplified particularly by:• Slow increase of incomes—and therefore low private savings—for those at the bottom of the pay distribution.• Cutbacks in employee health-care insurance and defined benefit pension plans.• Unsustainability of Social Security and Medicare as currently configured.This paper spells out these challenges and discusses how they can be addressed. Of particular importance are some combination of enhanced revenue and reduced expenditure for Social Security and Medicare, the shift of private pension plans from defined benefit to defined contribution, the need to consider later retirement ages, and the need for improved personal financial literacy.