Preparing For An Aging World

Aging societies are a worldwide phenomenon driven by several long-term demographic and lifestyle trends. Breakthroughs in healthcare, sanitation and nutrition; mass urbanization; and the introduction of social security systems to supplement old-age income have all helped elongate the human lifespan.1

Today, for instance, there are more centenarians, or people living above the age of 100, than at any point in history. In Japan alone, there are nearly 70,000, up from just 153 in 1963.And globally, average life expectancy is now 72, up from 67 in 2000.3

This trend is expected to continue for the foreseeable future. More than 80 countries worldwide already have fertility rates lower than replacement levels, and by 2050, the share of the global population above 65 is expected to rise to 16%, up from 8% today and 5% in 1950. 4,5

While emerging markets are younger relative to developed economies, they are following a similar trend, often aging more quickly than historical precedents. In recent decades, China saw its life expectancy rise from 67 to 75 and its fertility rate drop from 2.8 to 1.7, now below replacement levels.6 Longevity, as such, poses new challenges and opportunities for countries as they seek to both support the well-being of their senior citizens and maximize their potential as active participants in the economy.

Health systems are already anticipating greater demand among aging populations for senior services including housing and care, medical devices, and pharmaceuticals for advanced age-related diseases.  Technological innovation is only accelerating this trend, as new ways to support healthy aging, from personalized medicine to complex medical diagnostics and medical service robots, continue to proliferate. At the same time, senior citizens will have growing influence over their country’s overall economic might, as they will be working later in life and represent an increasing share of consumer discretionary power.

Accordingly, this blog post explores the implications of longevity and how the world is changing to accommodate longer lifespans.

Longer retirement: A grey tsunami or silver boon?

While demographers and economists agree that societies are aging, the impact on the economy and prospects for growth is less understood. A common concern is that the old-dependency ratio (people aged 65+ divided by people aged 15-64) is rising in many countries, including Japan, China, the US and much of the European Union. If the ratio climbs too high, economists fear it could result in labor shortages, stagnation and a greater burden on government coffers.

Although life expectancy has grown worldwide, retirement age has rarely risen at the same pace. This trend has not only increased the length of retirement but also the amount of resources needed to support retirees in their last decades. Longevity will put new pressures on the economy, including rising costs of healthcare, insurance and a greater burden of age-related diseases. While countries should take proactive steps to adapt to longevity, healthy aging should also offer economies new sources of growth.

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