Driven by falling fertility rates and increasing life expectancy, the age profile of different populations is shifting fast. The world already has more older people than children, and more people of extreme old age than ever before.
Economically, ageing is usually perceived as overwhelmingly negative. However, our latest Research analysis suggests a new, positive narrative focused on healthy and active ageing could create compelling potential for increased economic productivity – and also long-term opportunities for multiple market sectors.
Nearly every country in the world is experiencing growth in the proportion of its population aged over 65. This is partly a result of improved life expectancy, but also lower birth rates. Today, 91 out of 195 nations have fertility rates below the replacement level of 2.11. At the same time, all age cohorts in developed countries from Baby Boomers to Generation Z can expect, on average, to live to 90 or beyond.
Source: UN, Human Mortality Database. Data is for selected OECD countries: Australia, Canada, France, Germany, Italy, Japan, Spain, Sweden, UK, US
As a consequence, there are now more people aged over 65 than under 52. The oldest group (85 years+) is the fastest growing segment of the older population. Currently, there are 15 ‘Super Aged’ countries where more than 20% of the population is over 65, including Germany, Italy, France and Japan. By 2030, this is forecast to rise to 44 nations, and to 61 by 20503.
Source: United Nations
The issue of ageing tends to focus on the final stages of life, such as retirement, pensions, and ill-health, so is largely viewed in terms of its economic burden to society. The cost implications of ageing are important, but provided the needs of an ageing population are properly managed, the benefits of this demographic shift could outweigh the costs. For example:
Longer working lives: Globally, labour force participation growth is expected to slow from 1.8% pa over the past 50 years to 0.3% pa in the next 504. “Improving healthy life expectancy could justify delaying retirement age across many economies”
Increased consumption: Increasing preventative health spending by 0.1 percentage points has been associated with a 9% increase in annual consumption by people aged 60+5.
Productivity gains: Rising life expectancy correlates to increased output6 – thanks to the formal, technical and tacit skills that older workers have accumulated.
One study concludes the economic benefits from health improvements leading to fewer early deaths and higher labour market participation could add $12trn or 8% to global GDP in 2040.
Source: McKinsey Global Institute Analysis, Eurostat, ILOSTAT, Institute for Health Metrics and Evaluation, National Transfer Accounts project, Oxford Economics, OECDa
Realising the benefits of active ageing may require abandoning the ‘traditional’ three-stage life cycle, moving towards a multi-stage cycle with a variety of careers with breaks and transitions. This has the potential to provide societies with more choice and flexibility, and a better balance between work, leisure, family, finances and health.
Knot yet: Delayed marriage and parenthood
Young adults: Gap years, travelling and entrepreneurship
Extended retirement?: Even as people work into their mid-70s, the expected period spent in retirement is likely to be between 20-30 years.
Longer working life with multiple careers?: Career breaks to encourage re-skilling and re-learning
Source: Barclays Research
For this multi-stage life cycle to be realised, governments would need to design innovative policies and public services to address older-age issues such as housing, employment, health care, infrastructure and social protection, among others.
There is also a major role for the private sector, with emergent opportunities in health care, technology, construction and leisure and service sectors. Our analysts categorise these into five core market opportunities. (see ‘The Five Market Opportunities of Active Ageing).
Ageing is an inter-generational issue, with implications for everyone. The extent to which societies prepare for and invest in an ageing population will determine whether it creates an additional burden or delivers a ‘demographic dividend’. Our analysis suggests that a new narrative focused on healthy and active ageing could help society maximise the opportunities that come from longevity, while minimising the costs.
1 United Nations
2 United Nations
3 Barclays Research, United Nations
4 McKinsey report, July 2020
5 International Longevity Centre in collaboration with Sanofi and Legal & General, September 2020
6 International Longevity Centre
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