demographics of aging (stephen c. goss)

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Demographics of Aging:

Why is Our Population Aging?

How Will This Aging Affect Us?

National Press Foundation

Presented by Stephen C. Goss, Chief Actuary

Social Security Administration

June 13, 2011



2

The US Population is Aging

x What does this mean?

x Shift toward more elders, because

– Slowed growth for younger ages

– Faster growth for older ages

x But why??????



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The US Population is Aging

x Is it the ---

– Baby boomers?

– Individuals living longer? – Lower birth rates?

x

Yes, to all three



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Under 65 Growth Will Slow — Over 65 Speeding Up



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Age Distribution Shifting Older



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Why Is the Population Aging?

x Boomers now reaching retirement age

x Yes for a while, but ----

– This would be a temporary bulge – Would “pass through” over time

Permanent change for other reasons!!



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x Individuals are living longer

x Death rates have been declining

x Life expectancies have been rising



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Yes, Death Rates Are Dropping



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And Life Expectancies Are Rising(Note gender gap shrinking since 1980)



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x Individuals living longer is just one piece of the puzzle

x “Aging” of the Population – Changing age distribution

– Recall growth in younger population is slowing

» This is not due to death rates



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The BIG factor for the next 20 years…

x Birth rates have dropped

x This permanently changes age distribution

x Immigration has provided some

counterweight --- but not enough



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Birth Rate Dropped from 3 to 2;

Slow Pop Growth after Baby Boom



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How will this “Aging” Affect Us?

x Fewer working age people

– Compared to aged “dependents”

x

Workers will need to support more retireesx Or more young or old individuals will need

to work



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Consider Aged Dependency Ratio: OK So Far

Aged Dependency Ratios, 2011 Social SecurityTrustees Report

Historical Data

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

1975 1980 1985 1990 1995 2000 2005 2010

Year

A g e d D e p e n d

e n c y

Ageddependencyratio

(Population 65+/ Population 20-64)



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Big increases soon; not due to life expectancy

Aged Dependency Ratios, 2011 Social SecurityTrustees Report

Intermediateprojectioncomparedto no mortalityimprovement after 2010

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Year

A g e d D e p e n d

e n c y

Noincrease

inLifeexpectancy

after 2010

IntermediateProection

Ageddependencyratio



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Gradual aging after 2030 due to life expectancy

AgedDependency Ratios, 2011Social SecurityTrustees Report

Intermediateprojectioncomparedto no mortalityimprovement after 2010

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

1975 1985 1995 2005 2015 2025 2035 2045 2055 2065 2075 2085

Year

A g e d D e p e n

d e n c y NoincreaseinLifeexpectancyafter 2010

IntermediateProjection

Ageddependencyratio



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More “Dependents” per Worker

x Ultimately, each year, each day -------

x Goods and services of today’s workers

are shared with all in the population

x Economics is just how we distribute the scarce

resources



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Pay-As-You-Go System Depends on

Current Population

OASDI Covered Workers Per OASDI Beneficiary

0

1

2

3

45

6

7

8

9

10

1940 1960 1980 2000 2020 2040 2060 2080

Low Cost

High Cost

Demographic

Change

Program

Matures



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One Example: US Social Security Cost Rising as

Percent of GDP Above Currently Scheduled Revenue



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What to Do ?

x Aging population is largely due to lower fertility

x With fewer workers per population ---

Need lower consumption per person

- Workers share more, or others just get

less

x Will we find ways to encourage working longer?

x Political balance will determine the outcome

demographics of aging (stephen c. goss)

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