Aging is Society's Problem Too

 

 

For many of us, growing older is a personal issue. An issue for us and our families to sort through and deal with. But the fact is that, globally, aging populations are a demographic time bomb that is mostly being ignored by nations and societies. The world is experiencing a seismic demographic shift—and no country is immune to the consequences

By 2050, there will be 10 billion people on earth, compared to 7.7 billion today—and many of them will be living longer. Much longer. As a result, the number of elderly people per 100 working-age people will nearly triple—from 20 in 1980, to 58 in 2060. That's right. There will be nearly 3 times more elderly people for those young, working age people to support as there are now. Globally, the working-age population will see a 10% decrease by 2060. It will fall the most drastically, by 35% or more, in Greece, Japan, Korea, Latvia, Lithuania, and Poland.

There are many other social and economic changes that we can come to expect as the global population continues to age, including:

• With more people claiming pension benefits but less people paying income taxes, the shrinking workforce may be forced to pay higher and higher taxes. How long will they be willing to do so?
  
• As we have discussed before, longer lives do not necessarily mean healthier lives, with those over 65 more likely to have at least one chronic disease and require expensive, long-term care. Where will that money come from?
• Changing workforces may lead capital to flow away from rapidly aging countries to younger countries, shifting the global distribution of economic power. Standards of living will rise in a few places, such as India, but decline in many others.
  
• The strain on pension systems is perhaps the most evident sign of a drastically aging population. Although the average retirement age is gradually increasing in many countries, people are saving insufficiently for their increased life span—resulting in an estimated $400 trillion deficit by 2050. Who will pay for that?
  
• A pension is promised, but not necessarily guaranteed. Any changes made to existing government programs can alter the lives of future retirees entirely—but effective pension reforms that lessen the growing deficit are politically risky and so mostly ignored. How long can it be ignored?
  

Societies will have to divert a larger and larger share of national income to support a growing population of retirees. Many are already far along this path. Figures released by the United Nations Population Division show that Asia is at the forefront of this trend with Hong Kong, South Korea, and Japan expected to have the highest share at roughly 40 percent of their populations aged 65 and older by 2050. But Western Europe and North America are not far behind.

What does a world with billions of elderly people look like? Here is a preview.