Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

 Older poplations hitting countries' pocketbooks

- by Alan Duvall 

Published in Dayton Daily News  February 11, 2007 

“Will you still need me, will you still feed me, when I’m 64?”  Beatles. 

Worldwide, an alarming aging of populations in developed nations is creating an immediate need for corrective economic action.  Life-spans are increasing and birthrates declining.  This means that there are fewer working age individuals are supporting a greater percentage of elderly. 

In the U.S., the next 10 years will witness a staggering number of baby boomers entering retirement.

Despite studies indicating 70% will continue to work in some capacity, it is predicted the overall U.S. labor force will stop growing in 2008.  America will remain one of the youngest industrialized countries in the world. 

Other economic powers will be in even worse shape.  Europe is said to be losing population and its workforce is planning to retire between the ages of 55 and 64.  And unlike their American brethren, Europeans generally do not intend to work after retirement.  Across the continent, Japan harbors one of the oldest populations in the world.  Both regions have thus far maintained very generous government-sponsored retirement packages which are becoming quite strained.      

Even China is experiencing population imbalance issues, thanks to its long-standing one-child policy.  Its over-60 population may triple to 31% of its total by mid-century and it is estimated marriageable males will soon outnumber females by 27 million.  

Recently, Federal Chairman Ben Bernanke issued a stern warning America’s rising health care and Social Security costs could rifle the economy toward a financial “death spiral”. 

What to do?  Individuals need to plan earlier for retirement since sole reliance on the young to fund future Social Security is not wise.  Count on an advancing retirement age for Social Security benefits to begin thus requiring more private savings to fund longer lives. 

Businesses must adapt marketing strategies to compensate for shifting consumption trends in such industries as housing, food, clothing and automobiles.  And companies must consider an alteration in employee policies as the workforce tilts toward a higher percentage of older workers. 

“Old age isn’t so bad when you consider the alternatives.”  Maurice Chevalier 

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.