An aging society: opportunity or challenge?

"This paper steps back from the current political debate [in the United States] over the social security trust fund and examines the more general question of how serious a macroeconomic problem aging is and how policy should respond to it. We focus primarily on issues relating to saving and capital accumulation. We do not consider the broader question of whether the current U.S. national saving rate is too high or too low, but focus on the effect of demographic changes on the optimal level of national saving. In addition, we consider the effects of demographic change on productivity growth and the optimal timing of tax collections. Our general conclusion is that demographic changes will improve American standards of living in the near future, but lower them slightly over the very long term. Other things being equal, the optimal policy response to recent and anticipated demographic changes is almost certainly a reduction rather than an increase in the national saving rate."