The Longevity Dividend

June 3, 2025--Aging populations should be embraced, not feared
The story of demographic doom has become familiar: Declining birth rates will cause populations to shrink, while longer lifespans will increase the costs of pensions and eldercare. Relatively fewer workers will have to pay for it all.

This story is partly true: One in ten people worldwide are now over 65, and that proportion is projected to double over the next 50 years (see Chart 1). Population decline has already begun in places such as Japan and China. Those countries are also experiencing a sharp increase in median age, as is Europe.

But the pessimism around an aging population is too one-sided. In fact, the combination of older people becoming more numerous and more likely to work makes them essential to economic dynamism.

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Source: IMF.org