Ten thousand baby boomers are hitting retirement age every day. This demographic shift will impact the U.S. economy in the coming decades, as the percentage of the population in their prime working years declines.
But aging isn't just an American problem. Nearly every developed country experienced a "baby boom" in the years after World War II, and a declining birth rate in subsequent decades as their economies prospered (rich countries almost always see a declining birth rate).
And while America's demographic problem is bad, other countries' are far worse. As I've written before, America's working-age population is expected to rise by about 50 million between now and 2050. Due to its one-child policy, China's is expected to decline by 200 million.
Two weeks ago, I sat down with Mohamed El-Erian, CEO of bond giant PIMCO. He reiterated the point that even though America is growing older, we're one of the youngest countries in an aging world -- and that gives us a competitive advantage over others.
Here's what else he had to say about America's retirement problems (transcript follows.)
Morgan Housel: Do you think the United States is prepared for retirement?
Mohamed El-Erian: I think the United States is the best-off western country. So we still have critical demographics. We can still control our destiny and we have entrepreneurship and innovation that nobody else can match. So relative to the others, we're better, right? So in relative terms, we're better, which is important because it means we can attract capital beyond what we would otherwise. In absolute terms, there are certain promises that have been made that will be very hard to fulfill. So if you look at the pension system, if you look at the other retirement element, some of the stuff is going to have to be renegotiated because these promises were made at a different time and are going to be very hard to deliver in today's world.