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Implications of Aging Populations
and Increased Longevity
for National Governments
Steve Goss, Chief Actuary
United States Social Security Administration
GAO/CNAO Joint Seminar
Impacts of Aging Populations on National Governments
March 13, 2018
22
Developed Nations Are “Aging”
“Macro aging”– Changing age distribution—getting older
» Mainly from drop in birth rates
“Micro aging”– People are living longer
» Lower death rates
» Increasing longevity
Different challenges—different solutions—consider the U.S.
Micro Aging We are living longer, but there are limits, and progress is slowing
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0.8
0.9
1.0
0 10 20 30 40 50 60 70 80 90 100 110
Survival Curve U.S. Female: Period Data
1900
1925
1950
1975
2000
2013
0.0
0.1
0.2
0.3
0.4
0.5
0.6
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0 10 20 30 40 50 60 70 80 90 100 110
Survival Curve U.S. Male: Period Data
1900
1925
1950
1975
2000
2013
4
Cause of “Macro Aging”Mostly drop in birth rates
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2
3
4
5
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1865 1875 1885 1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015
U.S. Total Fertility Rate: With and Without Adjustment for Survival to Age 10
TFR Adjusted TFR
Notes: TFRs prior to 1917 are for whites only and survival rates prior to 1900 use Massachusetts data only.
1865-1895 4.44 3.09
1896-1925 3.36 2.801926-1965 2.86 2.71
1966-1990 1.99 1.951991-2015 2.00 1.98
Average Average
TFR Adjusted TFR
5
U.S. Drop in Birth Rate after 1965 Causes Dramatic Level
Shift; Continuing Longevity Gains Are Gradual and Small
0.00
0.05
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0.25
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0.35
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0.45
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1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Aged Dependency Ratio 2017 TRPopulation 65+/(20-64)
Actual and TR Intermediate
TFR remains at 3.0 after 1964
TFR remains at 3.3 after 1964
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Social Security Beneficiaries per 100 Workers Rise substantially due to this aging of the U.S. population
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30
40
50
60
1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090
Calendar year
Historical Estimated
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Social Security Cost as Percent of GDP For U.S., rises from a 4.2-percent average in 1990-2008, to about 6% by 2035
Cost for public and private pensions and health care rise similarly
3%
4%
5%
6%
7%
1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090
Calendar year
Non-interest Income
Historical Estimated
Cost
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Implications of “Macro Aging”What will we need to do?
It is a pay-as-you-go world
– In the aggregate, consumption = production
Solutions for dealing with aging population
– The older age distribution for the U.S. requires:
» Elders consume less: 2/3 as much
» Working age share more: 3/2 as much
» Get elders to work a lot longer: 5 years, and more
» Or some combination
We Are All Aging Together
Canada, China, Denmark, Japan, Sweden, U.S.
– World Bank international population projections
Birth rates have dropped for all
– Resulting in sudden shifts in age distribution
Net immigration can help slow macro aging
– Or can hasten it if young individuals emigrate
Increasing longevity is gradual
We all have similar challenges
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Birth Rates Now Below “Replacement” (below TFR of 2.1 for all six nations)
1
1.5
2
2.5
3
3.5
4
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Total Fertility Rate
Canada China
Denmark Japan
Sweden United States
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Adding in Net Immigration Puts All But
China and Japan Above “Replacement”
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1
1.5
2
2.5
3
3.5
4
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Adjusted Total Fertility Rate--Adding Net Migration to Births
Canada China
Denmark Japan
Sweden United States
Population Over Age 65 Is Increasing For All of UsBut this is not really our challenge
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0
200
400
600
800
1000
1200
1400
1600
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Population Age 65+; 1960 = 100
Canada China
Denmark Japan
Sweden United States
In 2000, 65+ Were Less Than 30 per 100 at Working AgesBy 2050, all but U.S expect over 40, Japan over 70
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0
10
20
30
40
50
60
70
80
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Aged Dependency Ratio--Population age 65+ / 15-64
Canada China
Denmark Japan
Sweden United States
Implications for our National Governments,
our Economies, our Populations
14
GDP and total income will grow slower
– So we will at least avoid overpopulation
Those over 65 will live AND work longer
Workers will share more of their income
We may encourage more births
Immigration can help, but we cannot all gain
Our governments must plan for changes
– Changes are needed VERY soon
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For More Information…http://www.ssa.gov/oact/
Annual Social Security Trustees Reports (U.S.)https://www.ssa.gov/oact/TR/index.html
Documentation of Trustees Report data & assumptions https://www.ssa.gov/oact/TR/2017/2017_Long-
Range_Demographic_Assumptions.pdf
International Population Projections—World Bank
https://datacatalog.worldbank.org/dataset/population-estimates-
and-projections
15