The population of the United States reached an average age of 38.9 years in 2022, according to data from the US Census Bureau published a few weeks ago by the World Economic Forum (WEF). Given that people are living longer than at any other time in history, it is essential for businesses, governments, and individuals to reconsider their approach to planning for an extended future life.
The WEF, in collaboration with Mercer, focuses on this topic in a new publication titled “Living Longer, better: Understanding Longevity Literacy.” This report examines how people perceive aging and retirement and provides a set of concrete actions that each stakeholder (individuals, businesses, and governments) can take to address the dimensions of longevity and succeed in a potential 100-year life. The study points out that although there has been some decline, people are expected to live much longer compared to 20 years ago.
The influence of the pandemic: In 2022, the number of births in the United States exceeded the number of deaths, but it was not enough to reverse the overall aging pattern since birth rates have been declining in recent years. This decline was more noticeable at the beginning of the COVID-19 pandemic. “While the natural change at the national level has been positive because there have been more births than deaths, birth rates have gradually declined over the past two decades,” said Kristie Wilder, a demographer at the Census Bureau, to The New York Times.
“Without a rapidly growing young population, the average age of Americans will likely continue to increase slowly but steadily,” added Andrew Beveridge, president of Social Explorer, a demographic data company, also emphasizing to The New York Times that “fewer children are being born.”
However, the United States is far from being the only country experiencing this trend. It also affects nations with stronger social programs than the United States, such as Norway, Sweden, Finland, and some developing countries like Chile.
The Maine factor: According to the newspaper La Nación, in approximately one-third of US states, over half of the inhabitants had an average age of over 40 in 2022. Maine had the highest average age at 44.8 years, although Hawaii recorded the largest increase in 12 months. In contrast, Utah had the lowest average age at 31.9 years, followed by the District of Columbia and Texas at 34.8 years and 35.5 years, respectively.
Life expectancy and diversity: Despite being considered a first-world country, life expectancy in the United States is much lower compared to other nations, as reported by La Nación. Americans have an average life expectancy of 77 years, while in Japan, another developed country, it is 85 years. Even in Chile, the average life expectancy is 82.1 for women and 77.3 for men.
Furthermore, as the nation ages, it also becomes more diverse. Between 2021 and 2022, the Asian population in the country grew by 2.4%, the Hispanic population by 1.7%, the Black population by 0.9%, and the White population only by 0.1%. These new data add to the evidence of an aging population, which poses challenges for the workforce, the economy, and social programs.
Korea and youth: Almost parallel to the publication of the study, there was news of the implementation of an interesting measure in South Korea, also related to the population’s age. More than 51 million people in South Korea woke up a few weeks ago being one or two years younger, at least according to the law. According to the legislation that came into effect, “all judicial and administrative areas” in the East Asian country will adopt the “international age” system used in most parts of the world, putting an end to years of debate over the issues caused by the previously common use of “Korean age” and “calendar age.”
According to CNN, when asked about their age in informal settings, most South Koreans would respond with their “Korean age,” which could be one or even two years older than their international age. This system has its roots in China, where babies are considered one year old on the day they are born, and one year is added every January 1st.
But beyond the adjustment, it is evident that the regulatory change in South Korea will have a concrete impact on public policies related to the labor market and social security, especially pensions. For now, there will be a postponement of the retirement age.
European society has been aging for much longer. In 1950, only 12% of the population on that continent was over 65 years old. Currently, the proportion has already doubled, and projections show that by 2050, over 36% of the population will be over 65 years old.
As in all cases, the responsible factors are birth rates and longevity: people are living longer while birth rates decrease.
This trend is worrisome. According to the WEF study, which cites the World Bank among its sources, more than 700 million people worldwide live in extreme poverty, defined as surviving on less than $1.90 per day. This means that certain groups of workers, such as temporary workers, independent contractors, and employees in the informal sector, often do not have access to savings or employer-sponsored retirement plans. As a result, it is unfeasible for them to accumulate sufficient funds for retirement given their financial circumstances. This ultimately leads to a likely old age without adequate conditions for subsistence, and the world will have to find a way to support them.
Social Security: Despite this demographic evolution not being new, as addressed in a study by Mapfre, its global impact is not being emphasized. “Governments, corporations, and individuals worldwide are already feeling the financial burden of demographic aging. Pension systems worldwide are dealing with the impact of increasing longevity on pensions,” warns John Strangfeld, President and CEO of Prudential Financial and Vice-Chairman of the Geneva Association, in the recently published report “Addressing the Challenge of Global Ageing – Funding Issues and Insurance Solutions.”