We've been hearing for years that the average age of much of the world -- essentially, the whole developed world -- is increasing. The usual phrase is that the world is "graying."
A report from the US Census, after it had absorbed the 2020 census figures, made a century-by-century comparison of the amount of gray in the population. In 1920, only about 1 in 20 of the people in the US were 65 or older. In 2020, that figure had risen to one in six.
But one doesn't have to see the change in such a long time frame to see it clearly. The largest ever 10 year numeric gain in the 'senior' portion of the population defined by that age is the gain between 2010 and 2020. That category gains 15.5 million people that decade.
One could make similar observations about much of the rest of the world.
There are various inferences one can draw from such facts. One, very much discussed, is that old-age pension systems are coming under stress. This has led to some heated debates in France of late.
A second inference, though, is that the graying is self-limiting. At some point enough boomers will have passed the point of no return so that they (we!) will no longer dominate the percentages. The figures will decline somewhat after that, as the smaller generations that followed the boomers replace them in that bracket. The numbers are unlikely to get back to the 1920 level mentioned above, though, since that would require a lasting reversal of a trend in life expectancy.
But a third inference (of more near term significance than the second) is that the health care industry, and especially those portions of it that cater to the needs of the senior set, is going to see increasing market demand for many years yet. This is news that is a great interest to investors.
Where specifically might you want to invest in to make money on that? The for-profit companies behind many retirement communities come to mind. There is of course risk. You could be on the wrong side of a competitive industry. So ... spread it out, bet on all sides of it. Somebody must by now have created an investable index of such companies so that you can bet on the whole industry.
Another risk, though, is that competition might operate at a more systemic level. There are companies devoted to providing at-home health services to the elderly, precisely so they don't have to move into such a place. That industry could end up limiting the profitability of the realty-based approach.
My personal conclusion is that there is a lot of money to be made here, and will be through the 2020s and at least well into the 2030s, but there is no especially safe way to make it. Which is true of life generally. There are always opportunities: there are always risks. Such is the dubious wisdom that comes with age.
Another reason that the average age is increasing, apart from the fact that baby boomers are aging, is that the life span is increasing. Because of that Republicans want to increase the age at which one becomes eligible for Social Security benefits. Paul Krugman has observed, however, that life span is increasing primarily among the higher economic class rather than among those who depend on Social Security benefits.
ReplyDeleteTrue. I mentioned that briefly at the end of the sixth paragraph above. I believe i read somewhere that increases in life expectancy have plateaued of late, though. Does Krugman give figures?
DeleteI googled "Paul Krugman life expectancy" and, looking at a few of the hits, did not see figures. Krugman does write, however, "that calling for an increase in the [Social Security] retirement age is, in effect, saying that janitors can’t be allowed to retire because lawyers are living longer." He also writes:
ReplyDelete"There is, in fact, a strong correlation between how much a state’s life expectancy rose from 1990 to 2019 and its political lean, as measured by Joe Biden’s margin over Donald Trump in the 2020 election — a correlation slightly stronger, by my estimates, than the correlation with income.
"There are several reasons to believe that America’s death trip is largely political rather than economic. One is the comparison with European nations, which have had much better health trends even when, as in Italy, their economies have performed badly.
"Another is the fact that some of the poorest states in America, with the lowest life expectancy, are still refusing to expand Medicaid, even though the federal government would cover the bulk of the cost (and the failure to expand Medicaid is killing many hospitals). This suggests that they’re failing to improve health because they don’t want to, not because they can’t afford to.
"Finally, since Covid struck, residents of Republican-leaning counties have been far less likely to get vaccinated and far more likely to die of it than residents of Democratic-leaning counties — even though vaccines are free."