Unlike recessions that can hit with little warning, the approaching economic impact of Hawaii’s aging population is like a freight train loudly sounding its horn in the distance to give those in its path time to prepare.

Policymakers in Hawaii and elsewhere have known for years that a bulge in the U.S. birthrate following World War II would eventually become problematic for state economies when those "baby boomers" reached retirement age and left the work force in large numbers.

Analysts warn the demographic shift will create a situation with fewer wage earners available to pay the taxes needed to support a growing senior population and its attendant health care and pension costs.

Economic growth also will be constrained by a net loss of skilled workers, while a lack of adequate pension income for both public and private sector retirees will force many of them to work longer in to their golden years and put a damper on consumer spending, a major economic driver.

Despite the warning, however, there are major questions as to whether Hawaii’s leaders are doing enough to prepare. Hawaii lags many states whose leaders have worked to reform government pension plans and help older adults remain active in the labor force.

Meanwhile the transition has begun, with some Hawaii baby boomers in state and county jobs already eligible for retirement. Large-scale retirements are expected to intensify in the years to come here as the average age of the population soars.

Between now and 2030 the share of Hawaii’s population 65 and older is expected to grow by 97 percent, easily outpacing the national average increase of 78 percent. There are currently about four working-age residents to support every retiree, but that ratio is forecast to decline to roughly a 2-1 ratio by 2030.

And as if the economic challenges resulting from the aging population weren’t enough, the labor market is undergoing structural changes that mean that some jobs lost during the recession are gone forever. Many businesses that were forced to trim labor costs during the slowdown have decided they no longer need those positions.

"As a result, a lot workers in that 55-and-older age group are losing their jobs and aren’t going to find an equivalent one," said Bill Boyd, a labor economist at University of Hawaii at West Oahu. Although some older workers will choose to stay in their jobs past retirement age, or take another job at lower pay, many are opting to retire early with lower benefits because they have no other option, Boyd said.

"People are leaving the work force in worse financial shape than previously. What you’re seeing is not future tense. It’s happening right now, and it will simply be extended into the future. Going forward, poorer, older people is what you’ll have."

Many workers in past generations were able to rely on a company-funded defined benefit plan to carry them through retirement, but that is no longer the case. IBM set the tone in 2005, shutting down its old-fashioned retirement plan that guaranteed its employees payments for life, replacing it with a 401(k) that was linked to the fortunes of the market. Much of corporate America followed suit.

"What that does is shift the risk from the employer to the individual," said John Rother, executive vice president of policy and strategy for the AARP. "And of course with the economic downturn all of those 401(k)s have become 201(k)s."

More alarming than that, adds Rother, is that half of the jobs in the U.S. have no pension at all.

The figure is slightly lower in Hawaii, where 44 percent of workers are employed by companies that do not offer a retirement plan, said Bruce Bottorff, associated state director of AARP Hawaii. That works out to just over 195,000 Hawaii workers with no access to a company-run retirement plan.

A recent survey conducted by AARP showed that seniors in Hawaii are already experiencing anxiety about their ability to make ends meet in retirement.

Of the 402 local seniors surveyed, 94 percent said their Social Security checks are important to their monthly budget and nearly one-quarter said it is their only source of income. Older Hawaii residents have been hit by dwindling retirement savings, rising living costs and mounting consumer debt, the report concluded.

To prevent the problem from worsening, AARP has proposed the creation of automatic individual retirement accounts that would require all businesses in Hawaii with more than 10 workers to offer their employees the opportunity to save at work through automatic payroll deductions.

In the government sector, by contrast, most state and county employees are covered by a pension plan funded largely by taxpayers. Although those workers are "guaranteed" lifetime pension payments under the defined benefit plan run by the Employees Retirement System, there are serious questions about the long-term health of the fund.

The ERS has just 65 percent of what it needs to meet its obligation to future retirees, putting it in the bottom 20 percent of all states, according to a recent study by the Pew Center on the States. Its unfunded liability stands at $6.2 billion, the highest in the fund’s history. There are currently 38,700 retirees drawing benefits from the fund, and another 15,000 active state and county workers are eligible to retire at anytime.

"That scares the bejesus out me. If you look at these trend lines we have an unsustainable situation going forward," said Marcus Oshiro, chairman of the House Finance Committee.

Other states in similar straits have launched reform efforts, with the state assembly in financially strapped California taking steps last month to cut $100 billion in pension costs over coming decades. Altogether, 19 states have passed new laws to curb pension costs this year, ranging from raising retirement ages to cutting benefits for retirees, according to the National Conference of State Legislatures.

"More states have enacted significant retirement legislation in 2010 than in any other year in history," said Ronald Snell, the NCSL’s expert on public pension plans. Hawaii was not one of them. "Lots of states did act and we expect them to continue to do so," he said. Snell said he wasn’t sure of the reason or the lack of action in Hawaii, but noted that the issue is a complicated one that states will need to study going forward.

The ERS offers three different retirement plans, one of which allows government workers to retire with full benefits at age 55 with five years of service. For the baby boom generation, the minimum age to qualify for full benefits from Social Security is between 66 and 67.

Oshiro said leaders in the state House last session made an attempt to increase the vesting period and number of years of service government workers would need before becoming eligible for pension benefits. But the bill never made it out of committee. "There was no supporting testimony from the ERS or the administration, but there was plenty of opposition from the rank-and-file union members," Oshiro said.

Tinkering with public pension plans is one of the more politically difficult tasks a lawmaker can undertake.

In Hawaii, the ERS has made some modifications to the funding methodology in recent years to address the growing unfunded liability. But pressure on the fund’s finances will continue as more state and county workers begin collecting pensions.

"Retirements have been increasing over the past several years and many more of them are anticipated to retire over the next three to five years," said Wes Machida, the ERS administrator. Retirements averaged about 1,500 to 1,800 a year between 2003 and 2008, Machida said. They rose to 1,842 in fiscal 2009 and then to 2,801 in fiscal 2010, an increase of 52 percent.

Pension payments for the fiscal year ending June 10, 2011, are expected to reach nearly $1 billion, he said. Should the 15,000 pension-eligible government workers actually retire in the next three to five years the annual benefit payouts could run as high as $1.5 billion to $2 billion, he said.

"Changing the contribution rates, modifying the ERS investment strategies and changing future benefits could be considered," Machida said.

Maintaining a competitive workforce, both in terms of skills and sheer numbers, presents another challenge for the state’s economy as the pace of retirement picks up.

A study commissioned by the Hawaii Tourism Authority in 2007 found that the shrinking labor pool is expected to affect some tourism occupations more directly than others. The report cited hotel housekeeping in particular, "where the majority of workers are foreign born and over 50 years of age."

Outrigger Enterprises Group executives are well aware of the situation and prepared to ramp up hiring to ensure a smooth transition to the next generation of housekeepers, said Ruthann Yamanaka, vice president of human resources. The company’s 600 housekeepers in Waikiki average 52 years old with 16 years of service.

"We have high longevity because our workers like their jobs," Yamanaka said. "We work very hard to make Outrigger a desirable place to work. Our strong reputation helps us to attract quality people."

Around the country, many states are failing to pursue policies aimed at maximizing the potential of older workers, said Linda Hoffman, senior policy analyst for the National Governors Association. "The engagement of older adults comes into sharp focus as states think about their future work force, fiscal stability and economic competitiveness," Hoffman said.

Some states, like Ohio, are pursuing comprehensive strategies with private-public partnerships designed to connect businesses with a pool of older workers. Others, like New Mexico and Idaho, hold job fairs for older workers, Hoffman said.

Hawaii has done little in this area. The state’s main employment program for older workers is a federally funded initiative for low-income individuals over age 55 who are seeking work.

"States must think strategically about maximizing the talent of older adults," Hoffman said.