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Burden of Aging Population "Less Than Feared," Study Says

James Owen
for National Geographic News
June 8, 2005
 
Higher life expectancy and falling birth rates have raised alarm bells
in developed countries, where many analysts fear future generations
could be financially crippled by the cost of supporting a graying
population.

Yet a new study suggests the situation isn't nearly as bad as it seems. The report adds that current generations needn't make massive changes to the way they live to avoid becoming a burden on society in their old age.

This finding is based on the idea that the number of years people have lived—the current way a population's average age is estimated—is less important than the number of years people have left to live.

Having redefined average age, the researchers have come up with new predictions of how the proportion of elderly dependents will change in developed countries, including the United States, Germany, and Japan.

The study, which will appear tomorrow in the journal Nature, suggests populations can effectively become "younger" through increases in life expectancy.

The study was led by Warren Sanderson and Sergei Scherbov. Both are senior research scholars with the World Population Program at the International Institute for Applied Systems Analysis in Laxenburg, Austria.

"We propose a new age concept, called a person's prospective age," the researchers write. "Prospective age is a forward-looking concept, based on the person's remaining life expectancy."

Here's an example of how this concept works: If the remaining life expectancy for a 30-year-old in 2005 is the same as for a 40-year-old in 2055, then the future 40-year-old can expect to stay alive for as many more years as a 30-year-old today can expect to live.

When applied to a country like Germany, this new method puts a whole new perspective on things. The average age in Germany is expected to rise by around 12 years between 2000 and 2050, suggesting a rapidly aging population. But when remaining life expectancy (the new model) is taken into account, there's little change.

Older Middle Age

"Middle age in Germany, which came around the age of 40 in 2000, will come around age 52 in 2050," Sanderson said.

In the case of the U.S., on the basis of prospective age, Sanderson and Scherbov's calculations suggest the population may actually get "younger."

"In 2000, the [average-age] American had to plan for 43.5 years of remaining life," the researchers write. "In 2050, the average American will have to plan for a future lifetime of around 45.8 years."

So the average age of populations in developed countries is creeping up. But in the future, average-age people in these countries may expect to live longer.

The researchers said that in many ways older people will be much healthier in the future and will behave as if they were much younger. Such a scenario has far-reaching implications for society—from the planning of retirement communities to government pension provisions.

With baby boomers fast approaching retirement age, a major concern for industrialized countries is how to support these retirees.

In the U.S. the Bush Administration has proposed major reform of the Social Security system, with a proportion of a worker's taxes going toward private pension funds.

In Japan there are plans to increase pension taxes from around 14 percent of salaries to 18 percent by 2017 and to cut pension payments from 59 percent of average wages to 50 percent.

Pension Shortfall

In Britain, Adair Turner, head of the government's Pensions Commission, has suggested raising the retirement age of professional workers to 70 to help bridge an estimated 50-billion-U.S.-dollar (27-billion-pound) shortfall in pension provision. The current government pension age in Britain is 60 for a woman and 65 for a man.

Study authors Sanderson and Scherbov agree that reform is needed. But if prospective age is taken into account, they said reform need not be as radical as many people propose.

Employing official retirement age as an example, the researchers point out that, using conventional calculations, Japan will have around 518 people over retirement age per thousand workers in 2020. However when the concept of prospective age is applied, the figure falls to 417 retirees per thousand workers.

In the case of the U.S., where the birth and immigration rates are significantly higher than in Japan, the researchers' calculations actually show fewer retirees per thousand workers in 2020 than there were in 2000 (206 vs. 209, respectively).

"In the U.S., the increase of two months per year in the age at which a full Social Security could be received would virtually guarantee the sustainability of the pension system without reducing promised benefits," the researchers write.

Taking a retirement age of 65 in 2000, that would mean raising the official Social Security retirement age to 68 in 2020. The researchers suggest adding three months per year for Germany, raising the retirement age there by five years over two decades.

"If you do this," Sanderson said, "the number of people that have to be supported by people of a working age would be much smaller. So even if people aren't taking up private pensions, this reform in itself will pretty much solve the problem."

He added, "Retirement age doesn't have to go up by very much and doesn't have to go up by big jumps, and it doesn't have to be very scary."

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