A congressionally mandated report from the council said people over age 65 making up an increasingly large percentage of the population is not a temporary phenomenon associated with the aging of the baby boom generation but a pervasive trend that is here to stay.
Long-term effects on all generations will be mediated by how -- and how quickly -- the nation responds, the study authors said.
"The bottom line is that the nation has many good options for responding to population aging," said Roger Ferguson, chief executive officer of Teachers Insurance and Annuity Association -- College Retirement Equities Fund and co-chairman of the committee that wrote the report. "Nonetheless, there is little doubt that there will need to be major changes in the structure of federal programs, particularly those for health."
Social Security, Medicare and Medicaid -- the cost of which currently amounts to roughly 40 percent of all federal spending -- are on unsustainable paths, the report said.
Because of overall longer life expectancy and lower birth rates, these programs will have more beneficiaries with relatively fewer workers contributing to support them in the coming decades, it said.
"The nation needs to rethink its outlook and policies on working and retirement," said Ronald Lee, professor of demography and economics at the University of California, Berkeley, and committee co-chairman. "Although 65 has conventionally been considered a normal retirement age, it is an increasingly obsolete threshold for defining old age and for setting benefits for the elderly."