Consequences of a graying world

Aging populations pose big problems. Here's what to do.

By Jonathan Grant and Stijn Hoorens

from the June 29, 2007 edition

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Cambridge, England - While attention is focused on efforts to make the world go green, the world is also changing dramatically because it is going gray. People over age 65 are starting to outnumber those under 16 in many countries.

By 2040, 1 in 4 Europeans will be more than 65 years old, up from 1 in 8 in 1990. The Chinese population is aging even more rapidly, to the extent that its total population will start to decline in the early 2030s.

Numerous studies have estimated the probable impact of population aging, from the potentially devastating effects on an unprepared welfare state to shortages of blood for transfusions.

Pension provisions will be stretched to the limit. The traditional model of the working young paying for the retired old will not work if the latter group is twice the size of the former.

But a 2006 survey of 20 countries and territories by banking giant HSBC revealed that, while 43 percent of respondents feel they should fund their own retirement, 30 percent expect to be supported by local or national government. Final salary pension plans are already disappearing, and governments will have to search hard for new ways to pay for their aging citizens.

Rising healthcare costs

In addition, as the population ages, healthcare costs will rise. By 2050, half of all age-related social expenditure will be taken up by health and long-term care in countries of the Organization for Economic Cooperation and Development.

There are two driving forces behind population aging. The first should be celebrated – we're living longer. In 1901, life expectancy in Britain for men was 45 years and for women 49. Today most Britons expect to reach their 80s, at least. In Britain in 2004, there were about 9,000 people older than 100.

Better healthcare, nutrition, and sanitation have all contributed to increases in life expectancy, and the trend appears to be accelerating. In the 20 years between 1985 and 2005, life expectancy at birth in Britain increased by 5.1 years for men and by 3.6 years for women.

The second driver of population aging is that we in Europe are having fewer babies. The social revolution brought about by the introduction of the contraceptive pill in the 1960s enabled many women to control their reproductive lives.

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