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The UK's ageing population is rarely out of the headlines. And rightfully so - we are living through a demographic shift unmatched in history: “one-in-six of the UK population is currently aged 65 and over, by 2050 one-in-four will be.” This simple fact is putting unprecedented strain on a welfare state unprepared for such a shift, and individuals too cavalier (or unable) to save while young.
These are the strands every ageing population story pulls at. But is it really all doom and gloom? As anyone who's ever invested in the stock market knows – one person's problem is another's opportunity. And the opportunities are already beginning to make themselves known.
The mainstream narrative treats older people as a burden, but perhaps it's time we respected our elders and review what they really have to offer. NHS Scotland recently ran an “Age as Asset” initiative seeking to use older staff members as mentors – an experienced source of knowledge. Other organisations might do well to do the same.
But we don't necessarily need schemes to tap into the potential of an older workforce. A recent study by Scottish Widows found 8% of British “retirees” changing careers after they “stopped working” and one in twenty starting their own business.
This is far more than a minor trend, as the number of over 65s in the workforce increased by 229,000 between the end of 2011 and mid-2014, pushing this figure over the one million point. If everyone worked one year longer it would raise GDP by 1%, and every extra year worked could boost an individual’s pension pot by £4,500.
In contrast, as of June 2014 the number of unemployed 16 – 24 year olds stood at 16.9%, down from 21.4% in early 2013. These figure are somewhat skewed by the fact that they include full-time students who are looking for part-time work, but are still concerning given that over half a million of this age group who are classed as economically inactive aren’t in full-time education. Clearly older people aren’t the only part of the population who need support and mentoring to stay economically active.
The emerging trend of career reinvention among the over 65s is particularly significant for women. For most it means that after decades of fitting their career around childcare, they can finally dedicate their attention to work. Equally, semi-retirement offers an opportunity to take on less demanding, or at least less time-intensive work, allowing them to continue to support their children by looking after grandchildren.
This point is significant. Aside from making a direct contribution to the workforce, older people can also be seen as a resource for childcare. As childcare costs have rocketed in the UK—up 27% in five years—grandparents are increasingly stepping in to help the child's parents go to work; meaning more people can stay in full time work, and that it pays to do so. Not always the case when free childcare isn't as option.
Despite the warnings of dire financial hardship among the over 65s, right now they are doing rather well for themselves, particularly in comparison to those in their twenties and thirties. Looking at recent ONS data, 31% of those over 65 are worth upwards of £500,000 compared to just 17% of 25 to 44 year olds.
The current generation of retirees are benefitting from a steep growth in property values and generous pension schemes. Meanwhile the age group beneath are the wealthiest in the country, as 44% of those aged between 45 and 64 have assets worth more than half a million pounds, implying that this group of people may not be facing as lean a retirement as some are predicting.
This wealth is translating into direct increases in spending power too. Between 2001 and 2010, discretionary spending on foreign travel, eating out, driving and theatre tickets rose among the over 65s but dropped among the under 30s, due to a combination of student debt, stagnant wages, high unemployment and increased housing costs.
Returning to the elder generation themselves, the upswing in silver entrepreneurs may also have something to do with experienced eyes spotting business opportunities. The ageing population represents a growing market for products and services. To take an obvious example, demand for devices that boost the sound levels on phones will only grow over time. Who better to identify those opportunities than those who have the same needs?
Our ageing population provides opportunities for a variety of business sectors, which in turn could drive job creation for younger workers. Health providers in particular need to grow to meet demand, for instance the demand for hip replacements, diabetes drugs and cataract surgery is likely to grow. According to research by Goldman Sachs (based on the American population), people under 25 spend less than £660 on health care whilst over-65s spend £3,300.
As a Fidelity blog put it: “Over the coming decades, we're likely to see the world's population age still further, boosting the demand for healthcare, financial services and some leisure activities. At the same time, expect to see emerging countries growing larger and richer, as more people move from rural areas to the cities.” Though it has to be said, the demographic shift is a slow moving one. Changes are painted as 'by 2035' and 'by 2050'.
This sort of shift is already happening in China, but the difference between a slowing developed world and a younger, more dynamic developing one will only become more pronounced as time goes by.
There's no denying the challenges presented by an ageing population, but we shouldn't ignore the opportunities it throws up. The real question is whether the economic contribution of a growing “grey pound” market, larger pool of older workers and substantial source of free childcare will be enough to balance the strain on welfare and health.