Coping with an Aging Society

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Coping with an Aging Society

The world is rapidly aging. Americans 65 and older are now 16% of the population and will make up 21% by 2035. At that point, they will outnumber those under 18.  In China, the large numbers of people born before the one-child policy was introduced in 1979 are swelling the ranks of older people, even as younger age groups shrink.  Other countries are even older. Japan, where more than a quarter of its population is 65 or older leads the way.  But Germany, Italy, Finland, and much of the rest of the European Union aren’t far behind.  And, a quarter of the people in Europe and North America will be 65 or older by 2050.

This trend is being driven by low fertility rates as women in almost all countries are having fewer babies.  The other factor is longer lives. While life expectancy has slowed its increase in some advanced countries in recent years, it continues its upward trend worldwide. A female baby born today in Japan is expected on average to live nearly 100 years.

Not only is the overall population aging; you will probably spend much more of your life being old then your parents did.  In 1960, if you were 65, you could expect to live to around 79. These days, you’re expected to live to nearly 85. If you’re already 75, you should expect to live until 87.

This represents a huge shift that is changing our economy, our social and cultural values, and even the way we perceive and plan our lives.  And while most managers and the general public have only recently begun to recognize the implications of this “gray tsunami,” the Trends editors began telling our clients how to exploit the “age wave,” 35 years ago.

Today, the conventional wisdom is that an aging population is toxic for economic growth.  To begin with, who will do all the work?  Even worse, how will we pay for all those old people’s medical and welfare programs?

This conundrum is typically boiled down to one simple metric: the dependency ratio.  The dependency ratio is simply the working-age population divided by the number of people who are too old, too young, or too ill to have a job. And many experts and politicians like to show scary projections of how trends in this ratio indicate that a demographic crisis is coming to get us...

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