Western world is ageing fast - May 08, 2019

Western world is ageing fast

The World, especially Western countries are ageing really fast. According to the United Nations, median age will soon be close to or over 45 in several developed and developing countries. This may cause serious problems in retirement and pension, so it’s good to think in advance.

It’s often said that the Western world is ageing, but it’s much easier to understand it through data visualization. That’s where the animations of Aron Strandberg published by World Economic Forum can come really handy. He created maps of median ages (50% of the population is older while 50% is younger than that) of the world from 1960 to 2060 based on United Nations data and projections.

Europe goes beyond 50

According to U.N. data and estimations, in the next decades some European countries (e.g. Spain, Italy, Portugal, Germany and many others) are going to hit median age of 50 or higher.

Some other countries will age slower, but they are expected to reach a median age around 45. These countries are the UK, France, Ireland, Scandinavia and several post Soviet countries, Russia included.

Others aren’t much better

America as a continent isn’t much better off than Europe. Canada will hit the 45 years median by 2060, while the United States will remain a tiny bit younger with a median age of 42. Although South American countries were generally younger in the past, they are ageing really fast. Most of them are going to reach a median above 40 by 2060.

Although we mainly focus on Western countries now, the Asia-Pacific is facing the same challenge. Japan leads the way, as they are expected to have a median age around 53 by 2060. Surprisingly, China is following them closely with an expected median of 50.

Why does all this matter?

A higher median age means an older population. That is a serious problem for the society as it puts serious pressure on pension and medical systems. It’s already known that pension systems have serious problems, no wonder countries are raising retirement age globally. (See: A pension crisis seems inevitable and Retirement age is rising globally.) Medical expenses are also rising with people getting older – that’s true for the individuals themselves and for the system as a whole. These are problems that communities will have to face as age is rising.

From the U.N. data we can also expect that this trend will not change, on the contrary. Just in the US, the number of people older than 65 will grow from 48 million to 88 million in three decades. This change might cause huge problems for pension systems. But at least we see that younger generations are focusing hard on self-care. (See: FIRE – The thing that leads to early retirement.) However, elders, too, should think more about their retirement and savings.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.