Atos Consulting Look Out | Aging Population

Concept

The aging population constitutes a shift in the distribution of a country’s population towards a higher average age.
Asia and Europe are the two regions in which a significant number of countries face severe population aging in the near future. Within twenty years, many Asian and European countries will face a situation where the largest population cohort will be those over 65 and the average age will be approaching 50.

Trajectory

Older people are more likely to save money and less likely to spend it on consumer goods, a situation that may lead to lower interest rates and disinflation. Some Japanese economists see advantages in this scenario, notably making further automatization and technological development possible without the usual social efforts and consequences of reducing the wages of the labor force and unemployment.
Social welfare systems have begun to experience problems. Pay-as-yougo pension systems are unsustainable. The largest area of expenditure now is healthcare, and the cost will increase dramatically as the population ages. Many governments will face hard choices between higher taxes, a change in tax systems (such as from labor to consumption), or a reduced government role in providing healthcare. Chances are that socio-economic disparities will become more pronounced in aging societies and thus frictions may arise if not dealt with appropriately.
There is a trend that senior-citizens will increasingly stay in or return to the workplace. As life expectancy rises, people are able and often willing to work until they are older. Governments are looking into plans to raise the pension age in order to keep the pension system affordable. Conversely, pensioners are returning to work in order to supplement a pension that can no longer financially support their retirement.

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