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
1963.2 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.
1.
“Study,
work, retire”: An outdated model. This three-stage model of the life cycle has traditionally been
used to capture the major parts of an individual’s career. Today though, this
paradigm is breaking down. More individuals in their 60s and 70s not only are
in excellent health but also aspire to remain productive participants in the
economy. They will work longer – not always out of necessity – but because they
want to and can. Older citizens have an opportunity to become net contributors
to the economy rather than net recipients, working part-time and even switching
careers or becoming entrepreneurs later in life. This transition will not be
seamless, as companies will have to adapt to create age-friendly workplaces
that can attract, protect and retain old workers. Still, such steps should help
retirement become financially sustainable in the long-term.7
2.
New
drivers of consumer discretionary spending. As the old-dependency ratio increases, seniors
will control even greater amounts of capital and spending power. Estimates
suggest that already 70% of disposable income in the US is controlled by those
above age 60, and in 2015, those age 50 and above accounted for $8 trillion USD
of economic activity.8,9 As the share of elderly wealth grows,
one can expect many industries to invest significantly in capturing “senior”
market share. These citizens could drive growth of sectors like entertainment
dining, and travel, or even create new retail markets tailored specifically for
seniors.
Sustainable longevity
Although longer lifespans
are one of humanity’s greatest triumphs, aging and death are still not
glamorous. Non-communicable and age-related diseases represent an
ever-increasing burden of morbidity and mortality. Many seniors will still need
specialized care services, and the transition to a global economy with older
citizens working longer will not happen overnight. As a result, several
industries are hard at work to address the challenges arising from longevity,
from illness to housing and assisted care.
1.
Pharmaceuticals: In most developed countries,
non-communicable and age-related diseases are the leading causes of death, and
this share is only expected to increase. Today in the US, heart disease and
cancer top the list, joined by chronic respiratory diseases, strokes, and
Alzheimer’s in the top 10.10 As more people age, there will
simply be greater demand for treatments, both old and new, to prevent, mitigate
and ideally cure such diseases. Innovations in technology and biotech research,
including the use of genomic data and bioinformatics for personalized care, can
offer further solutions in this space.
2.
Medical
Devices: As aging societies
develop new care requirements, medical device companies also stand to benefit.
Demand for senior assistance tools like walkers and pacemakers, and even new
technologies like wearables and robot assistants, are expected to grow
substantially. While wearables have captured the attention of younger
generations, there are ample use cases for seniors, such as monitoring their
health or contacting emergency services. Such tools will become especially
important as more adults express interest in living at home as they age. 76% of
those aged 65 and older in the US already say connected care technology is
important to improving home healthcare services.11 The
wearables market is expected to double by 2022, reaching $27 billion in sales.12
3.
Healthcare
providers: As more seniors
choose to live independently, healthcare providers will likely experiment with
different forms of service delivery. Remote monitoring is just one example.
Indeed, given the greater overall volume in demand for services among seniors,
healthcare providers themselves may act to reduce their in-patient care burden
by offering more services outside hospital settings, such routine check-ups at
a local pharmacy or telehealth medical appointments.
4.
Assisted
care and senior living facilities: Although people are living longer and often more
independently, the growth of aging populations should nevertheless bolster
long-term demand for senior housing, such as nursing homes, retirement
communities and end-of-life care facilities. Additionally, many seniors should
benefit from the availability of assisted care services like housekeeping,
dining assistance, transportation, emergency response systems and much more.
The long-term care market in the US, for example, is expected to grow to $550
billion by 2024.13
Alongside these
transformations, longevity should have several other spillover effects,
including sparking new models of wealth management, life insurance, and
consumer goods focused on the elderly. Continued innovation in all these
sectors should ultimately help make longevity more sustainable for seniors and
society at large.
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