Older adults are an emerging economic threat powerhouse

January 07, 2021

By Hadi Salah

The world’s 65-plus population is at a historical high of over 700 million people with projections to double in 30 years. We often think that an aging demographic leads to economic stagnation, as we expect unemployed, retired seniors to draw more from the tax pool than they contribute, and spend less due to reduced (often fixed) incomes. As chapter four of The Future of Aging and this blog highlight, widely held beliefs like this do not represent the full picture.  There is ample room for realistic optimism about the future aging economy and the role older adults have in augmenting society’s economic health and wealth.

Macro shift: to an abundance mindset

There are two necessary changes in perspective that need to happen to make way for the future longevity economy: later life is ripe with opportunity; and older adults have an abundance to contribute.

Again and again, societies have proven their ability to adapt to major economic and demographic shifts. This optimism is a consequence of a change in perspective that is key to the future economy: thinking of later life not only as a time of decline and need, but also a parallel period of abundance and creativity. With this mindset, organizations can focus not on overcoming the “burden” of retired seniors draining the limited well of social resources, but instead on leveraging this growing population in a way that creates positive capital flows for the young and old alike.

Another necessary change in perspective has to do with the nuances related to older adults’ participation in the economy. Older adults come from many socioeconomic contexts. On average, they are more educated and wealthier when compared to the prior generation. However, wealth disparity is real and growing, with the gap between the wealthy and the poor widening. Collectively, older adults (50-plus) in the US account for more than $8 trillion in economic activity, and constitute the world’s third-largest economy if they were counted as their own country, putting them just behind the U.S. and China when measured by gross domestic product. By 2050, their economic impact will more than triple to $28 trillion, making the aging economy one of the fastest growing untapped emerging markets.

The four shifts of the aging economy

Like the economy itself, the ways in which older adults think about making money, saving money, spending money and planning for their futures cannot be predicted based on past patterns and social norms. It really is a new, greenfield space that our society has never confronted. While for some, old age will continue to be about balancing fixed incomes and the high cost of newly incurred services such as healthcare. Many others have new, democratized channels to build wealth, and some are wealthier than they ever expected to be in their youth. They are asking new questions about financial legacy, and how to divide their wealth over time and among family members. Regardless of one’s economic circumstances, the next generation of older adults are making decisions that impact their own lives, the lives of their loved ones, and their economic contribution to society.

In this context, our research for the Future of Aging book revealed four economic shifts. These shifts provide new, forward-looking ways for organizations and societies to consider – and take advantage of – as they build products, services, experiences and policies to meet the demands of older adults:

1. Making money: older adults are staying in the workforce longer—whether it’s because they need to, or because their work provides a sense of purpose, or both. For whatever the reason, studies are showing that working longer can provide a much-needed sense of purpose in later life. Those seniors working past the typical retirement age could enjoy a healthier, longer life as a result.
2. Borrowing money: more and more older adults are taking on debt. Whether for mortgages, renovations, or to pay down bills, to the tune of $67 trillion in the US alone. This is in stark contrast to twenty years ago, where most older adults would have entered retirement with savings, a stable pension after a long career with one company and little to no debt.
3. Widening Intergenerational conflict – economic challenges are compounding culture clashes. Many younger generations feel as though the jobs, resources, and financial security they were promised and have worked hard for are dwindling, having been (irresponsibly) used up by the generations that came before them. But, the reality is that elderly people in general are still far more vulnerable to poverty and economic disenfranchisement than their younger counterparts. With COVID fostering a new era of intergenerational solidarity, a shift in the tides of this economic clash will be something to keep watching over the coming months and years.
4. Social vs financial legacy – For more older adults, the act of leaving a financial legacy may seem less realistic and less meaningful than leaving a social legacy. Today, rather than leaving money or other financial tokens, some seniors are embracing the chance to “leave opportunity” by providing their children (as well as the children of others) with a social legacy.

Looking ahead: tapping into the aging economy

The economic shifts, as well as the social and political changes that precipitate and follow them, do create complexity to tapping into the aging economy. Despite these changes, the desires and goals of older adults explored in the Future of Aging book remain fixed. This includes the fundamental need to feel secure and the desire to make a meaningful impact on society both during one’s life and after passing. Considering the four shifts underpinning the future of the longevity economy – and the nuances surrounding the shifts – organizations are able to re-imagine more relevant and purposeful experiences and realities for older adults, ultimately benefiting older adults, those participating in their lives and broader society.

Hadi is Director of New Ventures on SE Health’s Futures team. Hadi leads new venture development, investments, and acquisitions. He also leads SE Health’s Elizz platform for family caregivers and their employers. Hadi comes from a diverse background. A biochemist by training, he most recently led strategy, investments, and partnerships at RBC Ventures (Health & Wellness team), and the Ontario Ministry of Health’s Office of the Chief Health Innovation Strategist, as their industry lead. Hadi is a co-founder of the Hacking Health Foundation, currently enabling communities of health innovation across the globe in 15 countries and >45 cities.