A Demographic Tidal Wave

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April 29, 2016


Two powerful demographic forces are colliding — rising life expectancies and falling birth rates. Huge numbers of people — the baby boom generation — are beginning to reach retirement age, and they are expected to live longer than any previous generation. Due to this demographic “tidal wave,” for the first time in recorded history, there will be more older people in the world than children.

 

Life expectancies have been on the rise for hundreds of years and aren’t slowing down anytime soon. The global population of people 85 and older is expected to grow 351 percent during the next 35 years, according to the National Institute on Aging.

 

Just as significant, middle classes are expanding globally, and with that expansion, family sizes are shrinking, said Tom Hainlin, National Investment Strategist of Ascent Private

of U.S. Bank. “The inflection point for these changes is already behind us,” he said.

 

One of the most notable resulting trends is the “beanpole” family structure, he said. Families are becoming multigenerational units with fewer siblings, aunts, uncles and cousins.

 

Baby boomers in this structure will help care for

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April 29, 2016


children, grandchildren or even their parents. Just as often, they’ll fill work positions that would otherwise be left vacant, Hainlin said.

 

Accommodating older employees — sometimes dramatically older, compared with contemporary norms — will require changes to the workplace more radical than any being made today for millennials, he says.

 

Businesses are going to have to rethink everything from their physical plants to recruiting strategies in order to make up for relatively fewer young people entering the workforce.

Investors might find it useful to look for companies already moving in this direction and might want to be prepared to demand practices that accommodate older workers. It may not be a matter of social equity so much as protecting one’s investment.

 

For Tom Hainlin’s white paper and videos on Aging of the World’s Population, visit https://ascent.usbank.com/insights.

 

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