By Peter Francese Demographic Trends Analyst

With the rise of the world’s population past the 7 billion mark, opinions are plentiful as to the consequences of continued population growth.

In the past, these discussions focused on concerns that too many children would outstrip our food supply. However, as birth rates have been falling, many countries have shifted their focus to the rapid rise of elderly as it compares to a shrinking number of workers. A major concern now is too few young people to provide for the health care and needs

of the rapidly growing population of older people.

A Growing Population with a Shrinking Birth Rate

The world population is aging. In the past decade (2000–2010), world population grew an average of 1.27% per year. The U.S. Census Bureau projects that annual rate to slow to 1.11% in 2010–2020 and to 0.91% in 2020–2030. This slowing growth over time will result in fewer children and an increasingly older population. It’s a mathematical certainty that as the proportion of youth declines, older people become an ever larger fraction of any population. Despite this slower growth, by 2030 another 1.3 billion people are expected, in addition to the 7 billion here now.

The world’s two largest countries are projected to experience very different rates of growth. China is projected to add less than 5% to its population by 2030, while India is projected to add as much a 25% to its already very large population. There is a similarity, however, in that both countries are predicted to have an exponential increase in the percentage of older people to younger. Some nations, such as Russia, are already experiencing the effect of overall population loss and rapid aging.

Tax Burden, Employment, and Economic Impact

The prospect of gaining or losing substantial numbers of people over the next 20 years will no doubt focus the mind of government officials in those nations. But it will also have an economic impact on individuals and families now living in those nations where population gains or losses are extraordinarily large.

It’s a mathematical certainty that as the proportion of youth

declines, older people become an ever

larger fraction of any population.

Mature MarketI N S T I T U T E

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Global TrendsThe Impact of a Changing Age Structure

Mature Market TrendsJanuary 2012

A speciAl report From the metliFe mAture mArket institute

Declining or nearly zero growth population almost always means greater tax burdens on working people to finance increasing government outlays for health and other expenses to support rising numbers of elderly. It also means fewer employment opportunities, weak job growth, and rising unemployment rates among young adults.

That has two demographic effects, the first being that those young adults have fewer children, which slows population growth even more. The second effect is an increase in the

out-migration of young adults in search of work, which also diminishes growth.

Little or no population growth can have far reaching economic consequences, but those often take 10 to 20 years to become evident. By studying population projections by age it is possible to construct different scenarios of future economic activity depending on what kind of public policies are developed to deal with the projected aging populations.

The chart shows that globally people age 65 or older are projected to increase four times the rate of those age 18 to 64 years old. For some nations, the gap is far wider. By 2030 there are projected to be nearly

a billion people worldwide who will be age 65 or older, up from an estimated 533 million today. Almost half of those older people (44%) are expected to reside in China, India, or the U.S.

Prospects for a “Sustainable” Aging Population

Such high growth rates among the elderly are likely to cause huge increases in health care expenditures for those nations; increases that may not be politically or socially sustainable for some less affluent countries. One possible mitigating factor might be the ability and desire of people to work after age 65. The U.S. Census Bureau’s annual current population survey found that 36% of men and 25% of women ages 65 to 74 worked in 2010, substantially higher than the 21% of men and 13% of women in that age cohort who worked 20 years earlier.

Given the changing nature of work in today’s global information-driven economy, it is quite likely that 20 years in the future extending most people’s working life past 65 will alter both the image and the reality of what is a dependent population.

Finally, there have been substantial changes over the past 20 years in medical technology and more effective ways of caring for very elderly people in their homes rather than in institutions. Each country has a different demographic profile and is aging at its own pace. But there is little doubt that in the future, governmental resources are unlikely to meet the total array of needs of such a rapidly increasing elderly population. That creates a clear imperative for working age people of all nations to be thinking about their future as senior citizens and make their own financial plans accordingly.

Mature Market Trends | January 2012

World China India U.S. Brazil Russia Japan Mexico

-20

0

20

40

60

80

100

120

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Age 18-64

Source: Census Bureau’s International Programs Branch

Age 65 or older

21%

87%

108%

-2%

33%

106%

78%

8%

20%

120%

40%

-20% -16%

34%25%

116%

Chart 1: Projected population growth by age from 2010 to 2030

Global Trends: The Impact of a Changing Age Structure

Projected population growth by age from 2012 to 2030

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source: census Bureau’s international programs Branch