Demography is the study of population – births, deaths, ages, life spans, immigration, and so on. Governments can record the changes but in free societies can do very little to change the overall trends. It’s a bit like the tide coming in – you can adjust where you sit on the beach but you can’t stop the water rising!
Research by worldwide organisations including the United Nations and European Union shows disturbing trends such as these:
- In Australia, by 2020 there will be more people aged 65 than 1 year olds. There will never again be more children than grey heads.
- In 1980 Australia’s median age was 29. By 2020 it will be almost 40.
- By 2050, there will be only 2.7 people of working age to support each Australian aged 65 years and over. This is compared to 5 in 2010.
- Worldwide, there are six million fewer children aged six and under than there were in 1990. The United Nations estimates that by 2050 there will be 248 million fewer children in the world then there are now.
There are three irreversible demographic trends behind these figures. First is the bulge in retirement from the baby boomers (those born between 1946 and 1964). Many of the early baby boomers have either already retired or are close to retirement, and the late boomers are well into planning for their retirement. This bulge will guarantee a high proportion of older people in our society in the future.
Second is the fall in fertility rate. In developed societies we are not having enough babies to replace ourselves.
And thirdly, better nutrition and medical care means we are living longer.
These three trends mean:
- The number of employed people, ie. taxpayers, will dramatically reduce.
- The number of retired people needing social security, health and aged care support will rise.
- Government budgets will come under increasing pressure as society struggles with the problem of supporting a very large population of older people.
- Financial systems will come under threat as retirees sell off their assets to fund their retirement.
Every nation’s medical and social security system depends on taxpayer money to fund its existence. The retirement systems in America, Japan and many European countries may not be sustainable in their current form and more changes will be necessary.
Politicians may be unwilling to admit it but some unpopular decisions will have to be made. The simple choices are to raise taxes or restrict access to government benefits to only the most needy. The longer the decisions are delayed, the more difficult the transition will be.
The constant decline in birth rates will stunt the growth of national economies. As the consumer population decreases, production and product advancement will decrease due to a lack of demand, and economies will follow.
what does this mean for you?
It depends on your age and financial situation. Self-sufficiency in retirement should be a goal for everyone – this means owning your home, have enough savings to provide income, and being insured for health care. This gives you the freedom to choose the lifestyle you want.
If you are a long way from retirement, make a commitment to be a self-funded retiree. This may mean giving up current consumption to provide for spending when you finish full-time work.
If you are planning on retiring soon, you may need to review what retirement means to you. You might consider working longer.
If you are already retired, and rely on government benefits, you may need to consider learning new skills so you can supplement your pension and personal income with paid work.
This all sounds like a reality we would rather not hear, but like the tide coming in, there is not much we can do to stop it.
McCrindle Research Snapshot Report “Australia in 2020” www.mccrindle.com.au
www.treasury.gov.au “Australia to 2050: future challenges”
www.hcamag.com/news – Top demographic trends of the decade revealed: 2010 – 2020