“But time make you bolder, even children get older and I’m getting older too.” — from “Landslide” as performed by Fleetwood Mac
Part One in a two-part series
People on the planet are getting older. Developed countries are already struggling to deal with rapidly aging populations. According to demographic information released recently by the United Nations, by 2050 one of every six people alive will be over 65.
To consider this phenomenon, let’s analyze the populations of three large, industrialized countries — the U.S., Japan and China.
The life expectancy of Americans in the year 1900 was only about 47. Today it’s about 79, an increase of 32 years in just over a century. (Drug overdoses and a climbing suicide rate recently reduced U.S. life expectancy numbers, the first ever decline.) A remarkable increase in life expectancy occurred in the early part of the 20th century, when major public health gains followed advances like indoor plumbing, the expansion of electricity and improved medical care. Life expectancy increased from 47 in 1900 to age 59 by 1930, an increase of almost 25% in only three decades. If we add another 12 years to our current life expectancy, the average American will live to age 91 by 2050.
With the world’s longest life expectancy and a low fertility rate, Japan is the canary in the aging coal mine. Twenty-eight percent of Japan’s population is over 65, compared to about 16% in the U.S. and 9% in China. Some 60% of Japanese men ages 65 to 69 are still working; in the U.S. that number is only 38%. There is talk of raising Japan’s eligibility age for its national pension system from 65 to 70. Americans can currently begin taking Social Security benefits at age 62, if they so choose.
The last three decades in China mirror America’s first three decades in the 20th century, as modernization in an era of rapid industrialization has significantly increased life expectancy. A citizen in China can now expect to live to 76 years old, compared to 86 in Japan and 79 in the U.S. Consider that in 1950 the average life expectancy in China was only 45, so the following 70 years improved a life span by 31 years. In about 10 years, China will have more citizens over the age of 60 (360 million) than currently live in the U.S. Many Americans imagine China as a country bustling with youth and energy, however, they are graying just like the rest of us.
The implications for the U.S. and other countries are ominous. How will we fund Social Security and Medicare for more people for decades longer than initially anticipated, especially if there are fewer working age people to support them? Will the official Social Security retirement age be adjusted upwards or will benefits become income-based? How will we house our elderly population and provide medical care for them? Just as importantly, how will we keep them socially engaged?
Next week: What does an aging global population mean for the world’s economies?
Margaret R. McDowell, ChFC, AIF, author of the syndicated economic column "Arbor Outlook," is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.