THE SILVER ECONOMY: HEALTHIER AND WEALTHIER / THE FINANCIAL TIMES COMMENTARY & ANALYSIS

October 19, 2014 7:16 pm

 

The silver economy: Healthier and wealthier

 

Norma Cohen

 

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By 2050 those aged over 65 will outnumber children under five. The first part of a series on ageing populations looks at how that demographic shift is creating a new and powerful consumer class

W
hen Del Webb built its first retirement community in Sun City, Arizona, in 1960, the typical occupants were a retired husband and his wife who had never worked outside the home. The development promised an “active new way of life”, with a golf course, a weekly “chow night” at the recreation centre and the occasional minstrel show put on by residents.

“We would never build one like that now,” says Jacque Petroulakis of Del Webb. New developments hold fewer than 1,000 units and most have space for classrooms. Many have a motorbike clubhouse, and more than a quarter of buyers are single. “The whole idea of retirement is seen in a different light today,” says Ms Petroulakis.

The concept of retirement – and old age itself – is being reshaped by a record number of baby boomers who are, or are approaching, 65. The effects of this demographic shift are being felt well beyond Sun City.

A recent Bank of America Merrill Lynch report cites UN estimates that the number of people worldwide aged 60 years and older will double to more than 2bn by mid-century. By 2050, the number of those aged over 65 will outnumber children aged five and under for the first time in human history.

That scenario has huge implications for government, and business, not least where to find future generations of taxpaying workers.

Sarah Harper, director of the Oxford Institute of Population Ageing, says “the vast majority of people in the world will make it to age 70”, once considered extraordinary old age. The shape of the classic “population pyramid” showing large numbers of young people at the bottom with a few elderly on top has changed.

Fertility rates in developed countries, and in many emerging economies such as South Korea, have fallen so far that they face a shortage of younger workers and consumers. It means the number of those who once could be counted on to buy homes, cars, motorbikes, clothing and other consumer goods is also likely to shrink in the future.

 

“We’ve gone from a pyramid to a skyscraper,” Professor Harper says. “It will change the 21st century in a way we never could have imagined.”

The rise in longevity has upended policy on pensions and healthcare, with governments raising retirement ages and shifting responsibility for saving and investing on to individuals.

 

But there is another side of the coin to the ageing population: it offers many industries an opportunity to target a whole new market.


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