Economic challenges related to global aging

Margaret R. McDowell
Margaret R. McDowell

"We're getting older ... the world's getting colder; for the life of me ... I don't know the reason why." — from "Dog and Butterfly," as performed by Heart

Part Two in a Series

Last week we compared the aging populations in the three industrialized countries of Japan, China and the United States. With one in four citizens over the age of 65, Japan’s population is one of the world’s oldest. China's one-child policy, in place for several decades, aged its population considerably. Countries in both western and Eastern Europe also house populations that are currently older than that of the U.S.

The median age in Japan is 47.3 years. China's median age is 37.3 years. In the U.S., the median age is 38.1. The outlier among heavily populated nations is the world's second largest country, India, whose population has a median age of only 27.9.

For many decades the U.S. has enjoyed a comparatively younger population, owing primarily to higher birth rates and immigration. But the U.S. is rapidly graying. The Baby Boom is over. Fewer children are being born now and, despite a recent short-term decrease due to U.S. health issues, life expectancy has increased as well, aging our population. Consider this: by 2060, we will likely have a half million citizens who are 100 or older. The number of Americans who are 85 and older will triple. And like Japan, one in every four Americans will be 65 or older.

That our population is aging so rapidly presents a massive challenge to government and private industry in both spending and services. Let's start with health care. Our health care system will soon interact with a population of aged citizens, most of whom will have more medical needs each passing year. The demand for more medical facilities and hospital beds could become problematic. The availability of affordable and effective medicine, already a major economic issue, will become more vital. Consider, for instance, the probable increase in the number of emergency vehicle transportation requests in response to issues like heart attacks, strokes and disabling falls. Older folks simply require more medical services and products.

Funding increases in programs like Social Security and Medicare will require long range, proactive planning. We may see legislation that raises the minimum age for receiving Social Security benefits, and the age at which we qualify for Medicare will possibly be adjusted as well. Americans will likely work longer, many into their 70s, and mandatory retirement ages in various industries may be adjusted upwards.

Even with people working longer, there will be fewer in the workplace, which can result in labor shortages and declining productivity. We will also be challenged with keeping our elderly population engaged and socialized. Loneliness among our aging citizens is already considered a medical epidemic.

The bottom line is that many nations, including the U.S., will be forced to provide retirement funds and social services to aging citizens in numbers never before seen in world history. And the economic challenges will be immense.

Margaret R. McDowell, ChFC, AIF, author of the syndicated economic column "Arbor Outlook," is the founder of Arbor Wealth Management, LLC, (850-608-6121 —, a “fee-only” registered investment advisory firm located near Sandestin.