July 10, 2017
Ireland had better start building more retirement homes than primary schools. Ireland is getting old. While not quite at Japanese levels, where last year more incontinence adult nappies were sold than new-born babies’ nappies, Ireland is growing old quickly and we’d better prepare for it.
But it doesn’t have to be a problem.
The census tells us that in the last five years the population above 65 increased by 19% to 638,000, while the population under 5 fell by 7%, to 331,000. This is a significant development because not only are more of us living longer but we are having fewer children. This means that Ireland has now joined – at least demographically – the league of other older, richer Western nations that are experiencing falling birth rates but are increasingly concerned with the dilemmas of aging.
What does an older economy look like?
Traditionally, when we think of an older society, we assume that the economy will look slower, more affluent, more chilled. It is a society that doesn’t commute but lives in cities. We worry about the health costs and pensions cost. While these are issues, they don’t have to dominate the discussions. For example, many older people are these days very mobile.
The flight of Canadians and Americans from the cold northern states, the so called “snow birds” who flock to Florida, Arizona and Nevada or the Brits who head to the Costa del Sol, suggest a large percentage of old people are very mobile.
Politically an older society will vote differently. We see in the UK the demographic divide becoming more and more evident. The old, apparently infused with some type of elegiac, post-Empire 1950s nostalgia, voted for Brexit. The young on the other hand voted to remain in the EU, not just because they were thinking about the economy but because their view of the UK is one of a forward looking, outward looking European country.
In the last British election the young took their revenge on the old by voting in huge numbers for Jeremy Corbyn and his brand of Labourism that will have to tax the old much more to pay for services for the young.
This type of intergenerational politics is quite worrying and needs to be managed properly. As we’ve seen, again in Japan, things can get out of hand quickly. Older societies are much more likely to borrow heavily for today, because the recipients of the benefits – older people – will be dead when it’s time to pay the stuff back.
Since the early 1990s, Japan has embarked on a national debt spree. The debt/GDP ratio went from 44% to over 200% as old Japanese voters voted in governments that promised to spend today with borrowed money and ask the next generation to pay it back!
But the future doesn’t have to be dystopian at all. There is no reason to believe that an older society can’t be a society at ease with itself. Nor does an older society have to be less dynamic. It’s all about attitude.
At the moment there is an unambiguous view that older people are a burden on the rest, but this doesn’t have to be the case. A very different view of the aging population is emerging. Aging doesn’t have to mean a prolonged feeble old age, but an elongated productive middle age. In addition, we are all growing old so much more resources will be focused on this dilemma.
Think about it: aging is one of the few truly universal experiences. By 2050, the global population of people aged 60 and older will rise to 2 billion, up from 900 million in 2015. Between 1990 and 2013, global life expectancy rose by around six years, from 65.3 to 71.5.
Obviously in wealthy countries this cohort is bigger, richer and has more to contribute.
But older people can be highly productive and live enormously rich lives, based on years of experience that is invaluable.
Did you know that in the US for example, people in their late 50s and 60s start businesses at nearly twice the rate of those in their 20s? This is, in part, out of necessity, because they are being retired off from their old jobs but it is also because they have experience, capital, access to credit, networks and knowhow.
All these enormously important factors disappear when someone is “pensioned off” but when that same person applies himself to a new start up or mentoring others, these intangible attributes are invaluable.
Almost one-quarter — 23% — of new US businesses started in 2011 were launched by entrepreneurs between the ages of 55 and 64. These companies don’t shut down when these entrepreneurs reach 65; chances are, they are still expanding, investing and employing people. By contrast, the much larger 20- to 34-year-old bracket contributed 26% of new ventures.
Over half of retirees is the US are planning to begin what are called “encore careers” that combine continued income, greater personal meaning and tend to have a large social element to them.
In terms of spending, older people switch spending from necessities to luxuries such as recreation and education.
Today’s over-60s are the first generation to grow up with consumer electronics, computers and the Internet. As a result, they are much more technically savvy than their predecessors. They are online, shopping, looking for bargains and sometimes for new love.
As we get older, we buy different stuff. These is now a huge industry for anti-aging treatments and for telemedicine and mobile health, both of which have expanded rapidly in recent years and are poised for more growth.
Sales of anti-aging products and treatments have grown from about $80 billion a year in 2009 to well over $114 billion. This includes cosmetics with anti-aging, professional services, expensive hormone therapies, new biotech products, and cosmetic surgery.
Regenerative medicine has inspired a new wave of biotech start-ups. Current research places the size of the US market at $1.6 billion today; it is forecast to grow to more than $20 billion per year by 2025.
Telemedicine enables family members and doctors to monitor patients without sending them to a hospital or nursing home for extended periods.
Since 2010, the mobile health market — including telemedicine, remote devices, and mobile phone apps — has grown at a year-over-year rate of about 17%.
These are hugely important and growing markets.
In addition, older people, in prolonged middle age, provide the essential social ballast in our society often still helping their much older parents, while helping their adult children financially with deposits for houses, helping out on rents, helping cover the costs of education, seeding new ventures and generally being “on hand” for others. This is rarely discussed in economics.
We tend to forget that many older people are at the peak of their careers when they retire. They have assets, savings, know-how. And they know people who know people. One thing all of us face is old age. Medicine is contributing enormously, so that many of us can look forward to a prolonged middle age in decades when our parents or grandparents were “convalescing”.
It’s time to regard our older citizens as a huge resource rather than a deadweight cost.