investment viewpoints

What happens when the old outnumber the young?

What happens when the old outnumber the young?
Christopher Kaminker, PhD - Group Head of Sustainable Investment Research, Strategy & Stewardship

Christopher Kaminker, PhD

Group Head of Sustainable Investment Research, Strategy & Stewardship
Thomas Höhne-Sparborth, PhD - Head of Sustainability Research

Thomas Höhne-Sparborth, PhD

Head of Sustainability Research

The world’s population is ageing as a consequence of colliding factors including falling birth rates and rising life expectancy. An ageing population will bring about a number of challenges while also representing an important economic opportunity.

Virtually every country in the world is experiencing growth in the number and proportion of older persons in their population. This is set to become one of the most significant social transformations of this century and beyond. The UN anticipates that by 2030, the number of people in the world aged 60 years or over will have grown by 56%, to reach 1.4 billion. By 2050, the global population of older persons is projected to more than double its size relative to 2015, reaching nearly 2.1 billion1. The World Health Organisation (WHO) predicts that one in six people will be over 65 by 20502.

An ageing population will affect nearly every aspect of society but some sectors will be more impacted than others. Older people are more reliant on the healthcare sector, for example, than other age groups. While some of the proposed solutions to deal with this extra demand appear fairly universal, challenges also differ depending on the country in question.

This development presents a number of economic opportunities. Today’s baby boomers and seniors are estimated to hold up to three-quarters of wealth in some countries3. A number of firms are recognising the potential benefits of catering for the older generation. Companies that focus on innovation to address the needs of today’s retiree community are in line for above-average organic revenue growth.

The World Health Organisation predicts that one in six people will be over 65 by 2050.

This trend has ramifications for a number of sectors, including healthcare, technology, and financial services.

An ageing population will undoubtedly result in greater spending requirements when it comes to healthcare. This already represents one of the largest expenses for governments worldwide and is creating a demand for innovation and efficiency.

Part of cost-saving measures include supporting the development of new technology solutions to help relieve the pressure on healthcare systems. New solutions are emerging which aim to help people manage their own health.

This rapidly growing, increasingly wealthy generation, is also facing a potential shortfall of professional financial advice at a time when it is needed the most. The changes to retirement provision in particular have been accompanied by greater choice and complexity, emphasizing the need for face-to-face financial advice.

Society will need to adapt if it is to effectively provide the kind of support the older generation requires. Companies which are well-aligned with the needs of this demographic will find themselves tied to a rapidly growing market.

Certain sections of society will be more affected by this demographic shift than others. These represent areas of opportunity for investors looking to harness the potential of a long-term structural trend.


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