Why aging population is a problem

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Aging Industrialized Societies. Decline in Working-Age Population. Increase in Health Care Costs. Increase in Dependency Ratio.

Changes to the Economy. Key Takeaways Many industrialized nations are realizing the effects of an aging population, such as a decline in the working-age population and a surge in health care costs. The decline in the working-age population results in a supply shortage of qualified workers. Nations with a large senior population depend on a smaller group of people to pay for higher health costs, pension benefits, and other publicly funded programs. Article Sources. Investopedia requires writers to use primary sources to support their work.

These include white papers, government data, original reporting, and interviews with industry experts. In addition, the recent economic crisis not only increased the demand for social protection but it also drew attention to population aging issues as many countries faced unsustainable public debts.

In many nations, the already-high public spending limits the fiscal possibilities for increased aging-related spending in the long run. Therefore, pertinent and prompt policy solutions are necessary to ensure fiscal and macroeconomic sustainability as well as the health and well-being of citizens of all ages.

Recognizing this could be an essential part of the solution. Paid work contributes not only to material well-being but also to psychological well-being through social interactions and opportunities for personal and professional growth.

And unpaid work, like volunteering, care work, and artistic work, can provide these same psychological benefits. Given these positive effects, encouraging and rewarding paid and unpaid work among the elderly could be a pivotal part of the solution to the aging-related fiscal and social challenges.

To enact such a strategy, policy-makers could consider: i a gradual retirement scheme allowing older individuals to lower their working hours yet remain in the workforce and pay taxes until a later age ; and ii furnishing options for and rewarding volunteering, care, and artistic activities among older society members.

Encouraging older workers to remain longer in the labor force is often cited as the most viable solution to fiscal pressures and macroeconomic challenges related to population aging.

Phased-in retirement entails a scheme whereby older workers could choose to work fewer hours yet remain longer in the labor force, including after they retire. And gradual retirement can be beneficial to societies, employers, and workers:.

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