Hold off on the boom-and-doom talk

FOR MANY budget experts, 2006 brings with it a prominent milestone on the road to fiscal doom. This month, the first of the baby boomers -- the bumper crop of Americans born between the end of World War II and the year the Beatles first toured America -- will turn 60.

That leaves a mere two years before they are eligible to start collecting Social Security, and just five years before they can flash their Medicare cards in the doctor’s office. By 2030, when the entire gang will be over 65, the baby boomers could sink the entire body politic in a sea of red ink.

But the graying of America may not be the fiscal disaster that the deficit hawks project. The nation may age a good deal more gracefully than advertised, thanks to American ingenuity, adaptability and an increasingly hardy group of elderly, say a diverse group of demographers and public policy experts. The nation has continued to prosper despite a doubling in the share of the nation’s elderly population since 1960, said Robert Friedland, director of Georgetown University’s Center on an Aging Society. Thanks to leaps in worker productivity, the nation’s income has nearly quadrupled during the same time period.

Friedland, coauthor of the 2005 study “Demography Is Not Destiny, Revisited,” argues that the straight-line projections of the budget experts paint too dour a picture because of their conservative assumptions about many variables, including economic growth. He also contends that the projections are being misused by conservative advocates of small government to advance their ideological agenda. “I don’t want people to get away with the notion that it is simply the number of people” that dictates our future, he says.

Hand-wringing scenarios tend to ignore the myriad ways in which people, technology and political processes respond to changed circumstances.

FOR STARTERS, baby boomers are likely to work longer than preceding cohorts. A decades-long trend toward earlier exit from the workforce appears to have ended. And in surveys, most baby boomers say they plan on doing some sort of work even after “retirement.”

Already, some private and government programs are encouraging this trend. The Civic Ventures think tank, which hopes to inspire a movement for paid and unpaid “second careers” in social action, is planning to offer five $100,000 awards in June to people over 60 who devise new ways to tackle social problems. The seniors’ group AARP is collaborating with about two dozen companies to connect Americans over 50 with jobs. IBM recently started encouraging senior workers to become math and science teachers, offering them tuition and stipends while they student teach or mentor students online. The federal Defense and Education departments run the “Troops to Teachers” program to help steer military retirees toward public school teaching.

Public policy also is slowly encouraging people to work longer. The federal government took a big step in that direction in 1986, when it started changing Social Security benefit formulas to do away with a built-in benefit reduction for those who kept working and postponed getting Social Security. More “age-neutral” 401(k) plans are replacing traditional “defined benefit” pension plans, which were structured to move older workers out. Now, many experts say, Congress and employers will have to revisit a host of pension and health benefit rules that give both workers and their bosses financial disincentives to keep working.

When age-related ailments do stop people from working, new technologies, medical advances and innovative living arrangements could allow baby boomers to live independently longer -- potentially avoiding the projected explosion of nursing home costs. The AARP’s John Rother, in an interview in November, was optimistic about the health front. “By 2030, I have to believe that Alzheimer’s is no longer a threat and neither are urinary incontinence and osteoarthritis. Take these three away, and the nursing homes will be empty.”

In the end, the nation will likely avoid the scariest budget scenarios and adjust to its new, grayer population in fits and starts. “We’ll have a different set of values, and society will adapt,” said Robert Reischauer, president of the Urban Institute and a former head of the Congressional Budget Office. “That doesn’t mean these changes are all good, just because we will accept them. But the ‘Chicken Little’ view of history isn’t correct. Changes take place gradually, and people and institutions adapt.”