The Fiscal Challenge of an Aging Population in the United States

Research output: Chapter in Book/Report/Conference proceedingChapter


This chapter examines the fiscal challenge posed by the aging of the U.S. population. We summarize the likely future of U.S. demographics, focusing on the evolution of the dependency ratio. We describe the main U.S. government programs related to aging and assess their fiscal positions. Forecasts for the unfunded liabilities in these programs exceed $40 trillion. We provide a review of economic theory useful for understanding the likely economic impact of budget deficits. We evaluate the fiscal adjustment that is likely to be needed given the 2009 status of the U.S. fiscal position and predicted demographic changes: it is likely to be approximately 8% of GDP, which, while large, is an adjustment that has been managed by many countries in the past. Finally, we provide a brief survey of potential policies to address the fiscal challenge of aging, and of economic research evaluating such policies.

Original languageEnglish (US)
Title of host publicationThe Oxford Handbook of Work and Aging
PublisherOxford University Press
ISBN (Electronic)9780199940752
ISBN (Print)9780195385052
StatePublished - Mar 16 2012


  • Aging
  • Deficits
  • Fiscal adjustment
  • Medicare
  • Social security

ASJC Scopus subject areas

  • General Psychology


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