Population ageing is a dominant demographic trend that will have wide-ranging implications for Governments, economies, businesses, societies and individuals. You should care!
Along with the rest of the developed world, Australia's population is ageing, reflecting significant reductions in mortality and, to alesser extent, lower fertility rates. It is the older ages that have the mostsignificant population growth, rapidly changing the demographic shape ofsociety and the economy. These changes are driving increasing demand forvarious services often required at advanced ages.
The economic opportunities and challenges arising from thegrowing aging population are collectively called the Longevity Economy.
Many have the Longevity Economy covering those aged 50 andabove. However, even if you use an older age as the definition, this populationsegment represents a significant and growing market segment, and their needsand preferences drive new products and services.
Population projections by researchers in the ARC Centre ofExcellence in Population Ageing Research (CEPAR) show this accelerating growthin Australia's population at the highest ages (see Chart 1).
"The centenarian population, which means those aged100 and over, will grow at an even faster rate – increasing by 200% from 5,300in 2021 to 15,900 by 2041", says Dr Tom Wilson, CEPAR Principal ResearchFellow at the University of Melbourne (see Table 1). During the same period, the proportion of the population under 10 is projected to fall from 12% to 11%,while the proportion over 65 will increase from 17% to 21%.
In 2005, Australians aged 65 or older outnumbered childrenyounger than 10.
These demographic trends reflect significant increases inlife expectancy and, to a lesser extent, lower fertility rates. The latest lifetables from the Australian Bureau of Statistics (ABS) showed Australia's lifeexpectancy has continued to rise, now ranking third highest globally.
While the ABS is expecting the impact of Covid-19 to havea negative effect on Australia's life expectancy when the next results arereleased, the Australian life expectancy at birth for males is now 81.3 yearsand for females 85.4 years. However, more important for understanding the LongevityEconomy are the life expectancies of older Australians. This is where the mostsignificant improvements have occurred over the last 50 years (see Chart 2).
Chart 2: Life Expectancy at age 65
Given the improvements over time, most people born in thepast century have lived far beyond their life expectancy at birth. For example,I was born in 1961. The Australian Life Tables (ALT) 1960-1962 tell me that mylife expectancy at birth was about 68 years. Now that I have reached the age of62, according to ALT 2019-21, my life expectancy is 85—and that is still basedon historical data.
Leaving full-time work is confronting challenge for manyAustralians. A retirement plan should cover both financial and non-financialaspects of life, and there are many unknowns to factor in. One of the biggestunknowns is estimating how long the plan needs to last, the future lifespan.This is called longevity risk, the risk of outliving your savings.
Basic life expectancy numbers such as those quoted aboveare handy for analysing trends and differences between groups of people.However, they are definitely not suitable for retirement planning. It isessential to consider mortality improvements along with gender, socio-economicand health differences at the individual level.
It helps to appreciate the difference betweenchronological age, how many times you have circled the sun, and biological age,an assessment of future lifespan based on physiology at any given time. Thereis significant research in longevity medicine aimed at reducing biological age.
David Sinclair, a Harvard biologist and anti-agingresearcher, is one of the more prominent researchers working on understandingwhy we age and how to slow its effects. He lives by his research and, in earlyMarch 2023, claimed, "My calculated biological age has been going down forthe past decade or more to a point where I'm predicted to live at least adecade longer than I would have if I hadn't done anything."
While the debate about whether we can significantlyincrease life expectancy takes place, we also need to think about increasinghealthspan, the healthy period of one's life, as well as lifespan. Some of themore radical research might sound like science fiction—living to 200, anyone?However, the research is producing plenty of accepted interventions around dietand exercise that can be beneficial in increasing both healthspan and lifespan.
The Government released the fifth edition of theIntergenerational Report in 2021. This report examines the long-termsustainability of current policies and how demographic, technological and otherstructural trends may affect the economy and the budget over the next 40 years.It said the ageing population presents long-term economic and fiscalchallenges, including greater government spending on healthcare, the AgePension and end-of-life support.
Two recent Government announcements, one here in Australiaand the other in France, highlight the challenges for governments in respondingto these challenges.
In France, President Emmanuel Macron wants to raise thelegal retirement age to 64 from 62. This has resulted in strikes and riotsopposing this move. Macron says this change is essential to put France'spension system on a firmer financial footing as life expectancy rises and theratio of workers to retirees decreases.
In Australia, Treasurer Jim Chalmers started a debatearound the affordability and equity of tax concessions available insuperannuation. He then ignited a political row by announcing an increase froma 15% to a 30% tax rate on earnings for balances above $3 million.
While Government is working through these challenges, manybusinesses see the opportunities in the Longevity Economy to develop productsand services that meet the needs of older adults. All businesses shouldconsider developing a longevity strategy to consider the impact of demographicshifts on their employees and customers.
With respect to employees, is ageing part of yourDiversity & Inclusion Agenda? Ageism is a growing phenomenon in bothsociety at large and in the workplace. For the first time, we are seeing fivegenerations in the workplace. What is the best way to manage anintergenerational workforce, so everyone makes a valuable contribution? Whatrole can an employer play to help their employees with the transition toretirement in a way that suits both parties?
When it comes to the customer, do you consider the 65+ agegroup in product design exercises? For example, in the UK, supermarkets areworking on providing more support to older or more vulnerable customers ineverything from the packaging and placement on the shelves to the size of thekeys at the self-checkout.
The Adelaide-based Global Centre for Modern Ageing (GCMA)helps improve older people's lives. Its LifeLab studio is a simulated real-lifeenvironment where researchers and businesses can co-design and validateproducts, services and experiences that will better serve the lives of ageingpeople.
GCMA is part of what is known as the AgeTech, digitaltechnology built around older adults' needs and wants while including them inthe design process. AgeTech solutions can be broadly categorised in thefollowing areas:
AgeTech-specific venture capital funds are springing up tosupport these endeavours, attracted by the opportunities in the LongevityEconomy.
Increasing life expectancy and the growing number of olderadults will create challenges for individuals and organisations. However, thatcreates plenty of opportunities for those that embrace the Longevity Economy.
