Facing Up to Our Mismanagement of Population Aging

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Facing Up to Our Mismanagement of Population Aging

One of the most important challenges we will face in the coming decades is the aging of the world's populations. In both the developed and developing nations, a combination of factors has led to smaller generations of young people, who will soon have to support larger generations of retirees. This will have profound implications for the economy — unless the right steps are taken today.

As detailed in the World Economic Forum (WEF) report titled Global Population Ageing: Peril or Promise?1 the global share of people aged 60 and older went up only slightly over the past 60 years, from 8 to 10 percent. In the next 40 years, however, the 60-and-older group — which we'll call seniors in this discussion — will increase to 22 percent of the world's population. That's an increase of 1.2 billion people, from 800 million to 2 billion.

Global Population Ageing: Peril or Promise?

Moreover, the aging of the population isn't just a problem for the developing world, or for developed countries; it will affect both.

  • In the developed countries, seniors now represent 22 percent of the population, up from 12 percent in 1950. By 2050, that number will be 32 percent.
  • In the developing nations, seniors make up 9 percent of the population, up from 6 percent. But by 2050, that figure will reach 20 percent. As the WEF report points out, the increase in seniors in these poorer countries is even more alarming because they have less money to spend so they will "get old before they get rich."

According to the WEF, there are three primary drivers behind the aging of the population:

  • The first driver is declining fertility. Throughout the world, the average number of children born per woman dropped from 5 in 1950 to 2.5 today, and it is expected to fall to 2 by 2050. As the number of children per family declines, the share of the seniors in the population goes up.
  • The second driver is increased longevity. The average life expectancy around the world soared from 48 years in 1955 to 68 years in 2010. By 2050, the average person will live seven years longer, to the age of 75. Because people are living longer, naturally there are more seniors in the population than in the past.
  • The third driver is decreased mortality...

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