With more than 21% of their population aged 65 or older, Germany, Japan and Italy are super-aged countries.
Where are we going? To our demographic tradeoffs.
Supporting the Elderly
Researchers have divided a country’s demography into four age groups:
If the over-65 population is…
- below 7%, it is young.
- at 7-13%, it is aging.
- between 14-20%, it is aged.
- more than 21%, it is super-aged.
While Germany, Japan and Italy are now the only super-aged nations, by 2020, we can probably add Greece, Finland, Bulgaria and Portugal. And then by 2030 we can expect 17 more countries, including France, the U.K., Canada and South Korea, to join them.
With your typical French grandpa getting a big part of his income from government, maybe a private pension, some investments and perhaps a job, he winds up with 102% of what the average worker earns in France. Though Spain is the only other country in which the average elderly person earns more than typical workers, the trend is similar elsewhere.
Except for Germany, median incomes for the aged have been heading straight up:
Below you can see that for major EU nations, between 2005 and 2014, a growing percent of older people were in the labor force:
In Spain, the law dictates that old age pensions grow by a minimum of .25% annually while Great Britain has guaranteed annual state pension increases of 2.5%. In addition, Great Britain has given its elderly savers some protection from low interest rates through Pensioner Bonds that return 4% to all who are 65 or older. (When the bonds were first sold, one headline predicted a “savings stampede” from the elderly.)
Our Bottom Line: Tradeoffs
When grandpa gets more, it means that his slice of the income pie was not served to someone younger. If an aged person works, then someone younger did not get that job. If we have government pension payments or subsidized bonds, then that money comes from other people’s paychecks. Thinking of the federal budget, when programs for the aged get money then that same funding is not used for education or mass transit. And yes, even when a nation enjoys economic growth that offsets what it allocates to its aging population, still we have a tradeoff.
So, as our populations grow older we will have some pretty big tradeoffs to consider.