The Financial Time Bomb of Longer Lives

First the good news: We’re living longer, healthier lives than ever before.

We’re already so used to the idea of greater longevity, in fact, that it may seem ho-hum to learn that boys and girls born in 2008 in the United States have life expectancies of 75 and 81, respectively.

Those life spans, however, represent a bonus of about three decades, compared with Americans born in 1900, according to a report last year from the Census Bureau. And, by the way, Spain, Greece and Austria fared even better, proportionally: Life expectancies in those countries doubled over the course of the 20th century.

Now for the bad news: At this rate, we can’t afford to live so long.

And by “we,” I don’t just mean you, me and our often insufficient long-term-care insurance policies. I mean “we the people.” I mean the bureaucratic “we.”

For the first time in human history, people aged 65 and over are about to outnumber children under 5. In many countries, older people entitled to government-funded pensions, health services and long-term care will soon outnumber the work force whose taxes help finance those benefits. This demographic shift also means that the number of people living with dementia, whose treatment is estimated to cost $604 billion worldwide this year, is expected to more than triple, to 115 million, by 2050, according to a report this year by Alzheimer’s Disease International, a group representing 73 Alzheimer’s associations around the world.

No other force is as likely to shape the future of national economic health, public finances and national policies, according to a new analysis on global aging from Standard & Poor’s, as the “irreversible rate at which the population is growing older.”

How are the most developed countries handling preparations for the boom in the elderly population — and for the budget-busting expenditures that are sure to follow?

For a majority, not very well.

Unless governments enact sweeping changes to age-related public spending, sovereign debt could become unsustainable, rivaling levels seen during cataclysms like the Great Depression and World War II, according to the S.& P. report.

If the status quo continues, the report projects, the median government debt in the most advanced economies could soar to 329 percent of gross domestic product by 2050. By contrast, Britain’s debt represented only 252 percent of G.D.P. in 1946, in the aftermath of World War II, the report said.

So what is to be done?

For starters, governments should extend the retirement age, says Marko Mrsnik, the associate director of sovereign ratings in Europe for S.& P. and the lead author of the report. Another no-brainer, he says, is that governments should balance their budgets.

Alas, private citizens often don’t see the logic in curbing public benefits in order to maintain national solvency. Witness France last week, where more than one million people took to the streets to protest pension reform that would raise the minimum legal retirement age to 62 from 60.

Moreover, global aging experts say, measures like pension reform are inadequate, piecemeal responses to the giant demographic shift that is upon us.

If the cost of maintaining aging populations could lead to World War II-era levels of government debt, a solution to the crisis will require a mass-scale collaborative response akin to the Manhattan Project or the space race, says Michael W. Hodin, who is an adjunct senior fellow at the Council on Foreign Relations and researches aging issues.

Governments, industry and international agencies, he says, will have to work together to transform the very structure of society, by creating jobs and education programs for people in their 60s and 70s — the hypothetical new middle age — and by tackling diseases like Alzheimer’s whose likelihood increases as people age.

“What we need is a very fundamental and profound transformation that is proportionate to the social shifts that are upon us and that is truly innovative in the public arena, innovation that is driven by industry,” says Mr. Hodin.

Here’s one simple suggestion: Influential international organizations, government agencies, companies and academic institutions should take up aging as a cause, the way they have already done for the environment. Although the United Nations, for example, set eight “millennium development goals” — ensuring environmental sustainability, promoting gender equality, and so on — for 2015, the list did not include ensuring the sustainability and equality of aging populations.

“This is quite unacceptable that aging hasn’t been included in these goals,” says Baroness Greengross, a member of the House of Lords in Britain and chief executive of the International Longevity Centre U.K in London.

Here’s another suggestion: Governments with national health programs or other state coverage could start curbing the growth in medical spending ahead of the looming elderquake.

If countries wait to act, says Peter S. Heller, a senior adjunct professor of economics at Johns Hopkins University, they will have to scramble reactively to cut their budgets in response to burgeoning older populations, the way Greece, Ireland and Spain have done recently. At the same time, he says, politicians must also start educating citizens to understand that greater longevity may entail personal sacrifices, like increased savings and a willingness to pay higher shares of their medical and long-term care costs.

But the carrot may be a better approach than the stick, says Laura L. Carstensen, a professor of psychology at Stanford and the director of the Stanford Center on Longevity. She describes her outfit as a multidisciplinary research center whose “modest aim is to change the course of human aging.”

Rather than uniformly extending the retirement age, she says, governments and the private sector could develop incentives that motivate older people to remain in the work force. Those incentives might include bonuses for people who work until they are 70, exempting employers from paying Social Security taxes for employees over retirement age, more flexible work schedules, telecommuting options, and sabbaticals for education and training.

“Maybe culture needs to change first,” says Professor Carstensen, “and policy will follow.”

Finally, some governments and companies may need attitude adjustments so they can view aging populations not as debt loads but as valuable wells of expertise.

“I rather dispute your calling it a problem,” said Lady Greengross when I called to ask her how governments could better handle global aging. “It’s a celebration.”

As one example of how to embrace aging populations, she cites an equality act, recently passed by British legislators, that prohibits discrimination against older people (among others) seeking goods and services like car rentals or mortgages. Separately, she says, Britain next year will eliminate its default retirement age of 65, allowing people to remain in the work force longer.

“In the long run, I’d like to see age irrelevance,” Lady Greengross says, “where people aren’t just labeled by their birthdays.”

Source: The New York Times

Latest Developments

We keep our members and partners in touch with the most recent updates and opinions in the worldwide dialogue on population longevity and related issues.

What Old Age Might Be Like for Today’s 30-Year-Olds

Get ready for a new old age. With the U.S. fertility rate in a decadelong slump and the life expectancy of 65-year-old Americans approaching roughly 85, our aging nation is likely to grow older by midcentury, as the ratio of young to old continues to decline. The trend is likely to upend how our society is organized, making life very different for today’s 30-year-olds when they reach their 60s compared with life for 60-year-olds now.

World Population Reaches 8bn As It Grows Older

The world’s population reached 8bn people on Tuesday and will hit 9bn in 15 years as it experiences an unprecedented surge in the number of older people, according to the latest UN data. The global fertility rate has more than halved since the 1950s to 2.3 births per woman. With mortality also falling, the number of people aged 65 and over is expected to rise from 783mn in 2022 to 1bn by 2030 and reach 1.4bn by 2043, the UN population data revealed.

Global Coalition on Aging (GCOA) Launches Cross-Sector Alliance Committed to Health Innovation at High-Level Forum on The Silver Economy

Today, the Global Coalition on Aging (GCOA), along with cross-sector stakeholders representing patient advocacy, policy, industry, and academic communities, announced the launch of the Alliance for Health Innovation at the High-Level Forum on the Silver Economy in New York. The Alliance is dedicated to establishing the importance of innovation in achieving healthy aging and health equity through investments, policy reforms, and strategic partnerships.

Japan Must Face Up to Growing Danger of Drug-resistant Germs

In the wake of more than 6.4 million COVID-19 deaths worldwide and unprecedented economic destruction, the global community has no excuse to be caught unprepared for the next pandemic. Yet right now, a devastating parallel plague is already underway and worsening. Some years, it is killing well over 1 million people, according to medical journal The Lancet.

A Bipartisan Bill Could Prevent The Next Pandemic

In Washington, Republicans and Democrats are typically at loggerheads when it comes to healthcare policy. Just consider the recent Inflation Reduction Act, which made extensive changes to Medicare and also extended Affordable Care Act subsidies. Every single congressional Democrat voted for the legislation, while every single member of the GOP voted against it. But occasionally, a bill is such an obviously good idea, and so desperately needed, that it commands significant bipartisan support. The PASTEUR Act, co-sponsored by 31 Democrats and 31 Republicans in the House and two members of each party in the Senate, is just such a bill.

Korea Must Act Now to Combat Growing AMR Threat

Public officials are overlooking one of the gravest long-term threats to the Korean people, the health system, and economy: antimicrobial resistance (AMR). Some pathogens ― bacteria, fungi, parasites, and viruses ― have evolved strains that resist the antimicrobial medications we currently have available to fight them. Health care professionals often must watch helplessly as patients succumb to infections that antibiotics could once have easily beaten. They know that new antimicrobials, including and especially antibiotics, could easily gain the victory ― but they have none at their disposal.

Policy Statement on the Impact of Price Negotiations on Innovation, Healthy Aging and Equity

As the CEO of the Global Coalition on Aging (GCOA) and a newly formed cross-sector Alliance for Health Innovation, we write to express our deep concern with the current legislation that allows for price “negotiations” in Medicare – a thinly veiled signal for America’s plunge into price controls that will have a devastating and adverse impact on biopharmaceutical innovation and our nations’ ability to support healthy aging.