Why Population Aging Matters - National Institute On Aging

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NATIONAL INSTITUTE ON AGINGNATIONAL INSTITUTES OF HEALTHU.S. DEPARTMENT OF HEALTH AND HUMAN SERVICESU.S. DEPARTMENT OF STATEWhy Population Aging MattersA Global Perspective

ContentsForeword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1Overview—Our Aging World . . . . . . . . . . . . . . . . . . . . . . . . . 2Introduction—The Cost of Waiting. . . . . . . . . . . . . . . . . . . . . .4Trend 1: An Aging Population. . . . . . . . . . . . . . . . . . . . . . . . .6Trend 2: Increasing Life Expectancy. . . . . . . . . . . . . . . . . . . .8Trend 3: Rising Numbers of the Oldest Old. . . . . . . . . . . . . . .10Trend 4: Growing Burden of Noncommunicable Diseases. . . .12Trend 5: Aging and Population Decline. . . . . . . . . . . . . . . . . .14Trend 6: Changing Family Structure. . . . . . . . . . . . . . . . . . . .16Trend 7: Shifting Patterns of Work and Retirement. . . . . . . . .18Trend 8: Evolving Social Insurance Systems. . . . . . . . . . . . . .21Trend 9: Emerging Economic Challenges. . . . . . . . . . . . . . . . 24Endnote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Suggested Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Foreword People are living longer and, in some parts of the world,healthier lives. This represents one of the crowning achievements of the last century but alsoa significant challenge. Longer lives must be planned for. Societal aging may affect economicgrowth and many other issues, including the sustainability of families, the ability of states andcommunities to provide resources for older citizens, and international relations. The GlobalBurden of Disease, a study conducted by the World Health Organization and the World Bank,with partial support from the U.S. National Institute on Aging, predicts a very large increasein disability caused by increases in age-related chronic disease in all regions of the world. Ina few decades, the loss of health and life worldwide will be greater from noncommunicableor chronic diseases (e.g., cardiovascular disease, dementia and Alzheimer’s disease, cancer,arthritis, and diabetes) than from infectious diseases, childhood diseases, and accidents.Despite the weight of scientific evidence, the significance of population aging and its globalimplications have yet to be fully appreciated. There is a need to raise awareness about not onlyglobal aging issues but also the importance of rigorous cross-national scientific research andpolicy dialogue that will help us address the challenges and opportunities of an aging world.Preparing financially for longer lives and finding ways to reduce aging-related disability shouldbecome national and global priorities. Experience shows that for nations, as for individuals,it is critical to address problems sooner rather than later. Waiting significantly increases thecosts and difficulties of addressing these challenges.This report paints a compelling picture of the impact of population aging on nations. It providesa succinct description of population trends that are transforming the world in fundamentalways. We hope this information will stimulate dialogue about biomedical, economic, andbehavioral issues and encourage international study to determine the best ways to addressthis universal human experience. We trust that members of the global community will beinspired to share their recommendations and their experiences so that we can all plan for theaging of our world’s population. We are, after all, planning for our own futures.Paula J. Dobriansky, Ph.D.Under Secretary for Democracy and Global AffairsDepartment of StateRichard M. Suzman, Ph.D.Richard J. Hodes, M.D.Director, Behavioral and Social Research ProgramNational Institute on AgingNational Institutes of HealthDirectorNational Institute on AgingNational Institutes of Health

overviewOur Aging WorldWe are aging—not just as individuals or communities butas a world. In 2006, almost 500 million people worldwidewere 65 and older. By 2030, that total is projected toincrease to 1 billion—1 in every 8 of the earth’s inhabitants.Significantly, the most rapid increases in the 65-and-olderpopulation are occurring in developing countries, whichwill see a jump of 140 percent by 2030. w h y p o pu l a t i o n aging m a t t e rs : a g l o ba l p e rsp e c t i v e

A Host of ChallengesWhile global aging represents a triumph ofmedical, social, and economic advances overdisease, it also presents tremendous challenges.Population aging strains social insurance andpension systems and challenges existing models ofsocial support. It affects economic growth, trade,migration, disease patterns and prevalence, andfundamental assumptions about growing older.Using data from the United Nations, U.S. CensusBureau, and Statistical Office of the EuropeanCommunities as well as regional surveys andscientific journals, the U.S. National Instituteon Aging (NIA), with input from demographers,economists, and experts on aging, identifiednine emerging trends in global aging. Together,these trends present a snapshot of challengesand opportunities that clearly show whypopulation aging matters.l The overall population is aging. For the firsttime in history, and probably for the rest ofhuman history, people age 65 and over willoutnumber children under age 5.l Life expectancy is increasing. Mostcountries, including developing countries,show a steady increase in longevity overtime, which raises the question of how muchfurther life expectancy will increase.l The number of oldest old is rising. Peopleage 85 and over are now the fastest growingportion of many national populations.l Noncommunicable diseases are becoming agrowing burden. Chronic noncommunicablediseases are now the major cause of deathamong older people in both more developedand less developed countries.l Some populations will shrink in the nextfew decades. While world populationis aging at an unprecedented rate, thetotal population in some countries issimultaneously declining.llllFamily structures are changing. As peoplelive longer and have fewer children, familystructures are transformed, leaving olderpeople with fewer options for care.Patterns of work and retirement are shifting.Shrinking ratios of workers to pensionersand people spending a larger portion oftheir lives in retirement increasingly strainexisting health and pension systems.Social insurance systems are evolving. Associal insurance expenditures escalate, anincreasing number of countries are evaluatingthe sustainability of these systems.New economic challenges are emerging.Population aging will have dramatic effectson social entitlement programs, laborsupply, trade, and savings around the globeand may demand new fiscal approaches toaccommodate a changing world.A Window of OpportunitySome governments have begun to plan for thelong term, but most have not. The window ofopportunity for reform is closing fast as the paceof population aging accelerates. While Europecurrently has four people of working age forevery older person, it will have only two workersper older person by 2050. In some countriesthe share of gross domestic product devoted tosocial insurance for older people is expected tomore than double in upcoming years. Countriestherefore have only a few years to intensifyefforts before demographic effects come to bear.The challenges may seem daunting, but a hostof opportunities await us as well. For instance,countries that have begun to address issues ofpopulation aging can share their experiences.There are exciting opportunities for economicexpansion and cross-national collaboration aswell, but we must act now or the costs of waiting—financial and social—will be overwhelming.o v e r v i e w — O U R A G I N G WO R L D

introductionThe Cost of WaitingGlobal aging is a success story. People today are livinglonger and generally healthier lives. This representsthe triumph of public health, medical advancement, andeconomic development over disease and injury, whichhave constrained human life expectancy for thousandsof years. w h y p o pu l a t i o n aging m a t t e rs : a g l o ba l p e rsp e c t i v e

But sustained growth of the world’s olderpopulation also presents challenges. Populationaging now affects economic growth, formal andinformal social support systems, and the abilityof states and communities to provide resourcesfor older citizens. Nations must quickly recognizethe scope of the new demographic reality andadjust current policies accordingly. Experiencehas shown that such adjustments may bepainful—changes in retirement ages and medicalbenefits, for example, are not widely popular. Butexperience also shows that it is easier to addressproblems sooner rather than later, when the costof waiting may become insurmountable.We can think about preparing for older ageon both an individual and societal level. Onan individual level, people need to focus onpreventive health and financial preparedness.We know that many individuals approach olderage with little or no savings. A simple exampleillustrates the financial cost of waiting to saveand the value of a more farsighted perspective.A 40-year-old worker who begins to save 10,000 per year will accumulate 700,000 bythe time he is 70 years old, assuming an interestrate of 5 percent per year. If he had begun savingwhen he was 30 years old, he would only haveneeded to save 5,500 per year to accumulatethe same amount by age 70.Calculating the cost of waiting at the nationallevel is much more complex, but similarreasoning applies. Just as for individuals, smalland gradual changes distributed over a longertime horizon are more easily absorbed by acountry than sudden and more substantialactions required to meet a particular savingstarget over a shorter time horizon. Countries andinternational organizations are now developingdetailed models in recognition of looming costsand the need for pension reforms to ensuresustainable old-age support. In 2006, theEuropean Commission and the Economic PolicyCommittee submitted a report to EuropeanFinance Ministers with new projections ofeconomic and budgetary costs for EuropeanUnion (EU) member states. While Europecurrently has four people of working age forevery older citizen, it will have only two workersper older citizen by 2050 as a result of the babyboom generation retiring and life expectancyincreasing. Given current policies, the pension,health, and long-term care costs associatedwith an aging population will lead to significantincreases in public spending in most memberstates over the next half century. Gross domesticproduct growth rates are projected to fall acrossthe EU, and in the absence of policy changes, thepotential EU economic growth rate will be cut inhalf by 2030.While some countries have initiated changes inretirement age that promise to ease the burdenof public spending, the EU analysis emphasizesthat such changes alone are inadequate. Duringthe next few years, countries must exploit afast-closing window of opportunity to intensifyreform before demographic effects come to bear.The EU report notes that, similar to the impactof an individual worker delaying savings, delaysat the national level will increase the costs ofadjustment and shift an enormous economicburden to the next generation of workers andtaxpayers.I N T R O D U CT I O N — T H E CO S T O F W A I T I N G

1trendAn Aging PopulationSince the beginning of recorded human history, youngchildren have outnumbered older people. Very soon thiswill change. For the first time in history, people age 65and over will outnumber children under age 5 (Figure 1).This trend is emerging around the globe. Today almost500 million people are age 65 and over, accounting for.8 percent of the world’s population.Figure 1:Young Children anD Older People as aPercentage of Global Population'% 6 : *&* &% 6 : 1 ** &.*% &. % &.,% &.-% &.% '%%% '%&% '%'% '%(% '%)% '%*%Source: United Nations Department of Economic and Social Affairs, Population Division. WorldPopulation Prospects. The 2004 Revision. New York: United Nations, 2005. w h y p o pu l a t i o n aging m a t t e rs : a g l o ba l p e rsp e c t i v e

By 2030 the world is likely to have 1 billion olderpeople, accounting for 13 percent of the totalpopulation. While today’s proportions of olderpeople typically are highest in more developedcountries, the most rapid increases in olderpopulations are occurring in the less developedworld. Between 2006 and 2030, the number ofolder people in less developed countries is projectedto increase by 140 percent as compared to anincrease of 51 percent in more developed countries.Population aging is driven by declines in fertilityand improvements in health and longevity. Inmore developed countries, declines in fertilitythat began in the early 1900s have resulted incurrent fertility levels below the populationreplacement rate of two live births per woman.Perhaps the most surprising demographicdevelopment of the past 20 years has been thepace of fertility decline in many less developedcountries. In 2006, for example, the total fertilityrate was at or below the replacement rate in44 less developed countries.Most of the more developed nations have haddecades to adjust to this change in age structure(Figure 2). For example, it took more than acentury for France’s population age 65 and overto increase from 7 to 14 percent of the totalpopulation. In contrast, many less developedcountries are experiencing rapid increases in thenumber and percentage of older people, oftenwithin a single generation. The same demographicaging process that unfolded over more than acentury in France will occur in two decades inBrazil. In response to this “compression of aging,”institutions must adapt quickly to accommodatea new age structure. Some less developed nationswill be forced to confront issues, such as socialsupport and the allocation of resources acrossgenerations, without the accompanying economicgrowth that characterized the experience ofaging societies in the West. In other words, somecountries may grow old before they grow rich.Figure 2:the speed of population agi ngNumber of years for population age 65 to increasefrom 7% to 14%9ZkZadeZY 8djcig Zh;gVcXZ &- *"&.-% &&* HlZYZc &-.%"&.,*-* 6jhigVa V &.(-"'%&&,( JH &.))"'%&( . 8VcVYV &.))"'%%. * jc\Vgn &.)&"&.)*( EdaVcY &. "'%&(), J@ &.(%"&.,* )* HeV c &.),"&.')* ?VeVc &.,%"&. ' 9ZkZade c\ 8djcig Zh6oZgWV Vc '%%%"'%)&)& 8] aZ &.-"'%'*', 8] cV '%%%"'%' ' ?VbV XV '%%-"'%(( '* Ijc h V '%%-"'%('') Hg AVc V '%%)"'%','( I]V aVcY '%%("'%'* '' 7gVo a '%&&"'%(''& 8dadbW V '%&,"'%(,'% H c\VedgZ '%%%"'%&.&. Source: Kinsella K, Gist Y. Older Workers, Retirement, andPensions. A Comparative International Chartbook. Washington,DC: U.S. Census Bureau and U.S. National Institute on Aging,1995; and U.S. Census Bureau. International Data Base.Available at: http://www.census.gov/ipc/www/idbnew.html.Accessed January 8, 2007.TR E ND 1: A N AG ING POPU L ATION

2trendIncreasing Life ExpectancySome nations experienced more than a doubling of averagelife expectancy during the 20th century. Life expectancyat birth in Japan now approaches 82 years, the highestlevel among the world’s more developed countries, andlife expectancy is at least 79 years in several other moredeveloped countries.lLess developed regions of the world haveexperienced a steady increase in life expectancysince World War II, with some exceptions in LatinAmerica and more recently in Africa, the latter dueto the impact of the HIV/AIDS epidemic. The mostdramatic gains have occurred in East Asia, wherelife expectancy at birth increased from less than45 years in 1950 to more than 72 years today.Changes in life expectancy reflect a health transitionoccurring around the globe at different rates andalong different paths. This transition is characterizedby a broad set of changes that includes:l A shift from high to low fertility;l A steady increase in life expectancy atbirth and at older ages; and A shift from the predominance of infectiousand parasitic diseases to the growing impactof noncommunicable diseases and chronicconditions.The health transition shifts the human survivalcurve so that the chances of surviving anotheryear are higher at every age. In early nonindustrialsocieties, the risk of death was high at every age,and only a small proportion of people reached oldage. In modern survival curves for industrializedsocieties, most people live past middle age, anddeaths are highly concentrated at older ages.Figure 3 depicts the evolution of survival forWhite females in the United States from 1901 to2003. In most countries, the curve shifts to theright as longevity increases.Increases in the probability of survival raisequestions about limits to life expectancy and thepotential for human lifespan. Despite assertionsthat life expectancy must be approaching a limit,data on female life expectancies from 1840 to2000 show a steady increase of 3 months per year(Figure 4). The country with the highest averagelife expectancy has varied over time—in 1840 itwas Sweden, and today it is Japan—but thew h y p o pu l a t i o n aging m a t t e rs : a g l o ba l p e rsp e c t i v e

Figure 3:White Female Survival in the United States: 1901 and 2003&%% -% '%%(& .%& % )% '% % 6 : &% '% (% )% *% % ,% -% .% &%%Source: Glover J. United States Life Tables, 1890, 1901, 1910, and 1901-1910. Washington: Bureau of theCensus, 1921. Available at: 910.pdf; and Arias E.United States Life Tables, 2003. National Vital Statistics Report: 2006;54(14):1-40. Available at: .http://www.cdc.gov/nchs/data/nvsr/nvsr54/nvsr54 14.pdf.Figure 4:linearity of the pattern (also seen for males) isremarkable. While HIV/AIDS, obesity, and similartrends may temper expectations for continuedincreases in longevity, several findings encouragea more optimistic outlook. These include:l Studies showing that death rates at very oldages level off or decline;l The explosion in the number of centenariansworldwide;l The finding that, even at older ages, mortalityrates are malleable and amenable to socialinterventions; andl Evidence that medical advances and newdrugs are increasing life expectancy.Recent research raises other questions aboutthe future of life. Researchers have been able toexperimentally increase lifespan in insects andanimals through gene insertion, caloric restriction,and diet. It remains to be seen whether similarincreases can be replicated in humans.highest National LifeExpectancy at Birth: 1840–2000Life expectancy in years-*-%LDB:C,*,% *B:C %***%)* &-)% &- % &--% &.%% &.'% &.)% &. % &.-% '%%%Source: Adapted from Oeppen J, Vaupel JW. Broken Limitsto Life Expectancy. Science. 2002;296;1029-1031.T R E N D 2 : I N C R E A S I N G L I F E EX P ECT A N CY

3trendRising Numbers of the Oldest OldAn important feature of population aging is the progressiveaging of the older population itself. Over time, more olderpeople survive to even more advanced ages. For researchand policy purposes, it is useful to distinguish between theold and the oldest old, often defined as people age 85 andover. Because of chronic disease, the oldest old have thehighest population levels of disability that require long-termcare. They consume public resources disproportionatelyas well.The growth of the oldest old population has anumber of implications:l Pensions and retirement income will need tocover a longer period of life.l Health care costs will rise even if disabilityrates decline somewhat.l Intergenerational relationships will takeon an added dimension as the numb

global aging issues but also the importance of rigorous cross-national scientific research and policy dialogue that will help us address the challenges and opportunities of an aging world. Preparing financially for longer lives a

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