Isn’t the population of +65 old persons in the U.S. supposed to gradually increase until the 2030’s? It’s the coming of the baby boom generation into the senior class and we know the weight this generation can through around in terms of sheer numbers.
I recently did some research regarding the population trends of the +65 crowd in the U.S. I had previously been under the assumption that the group was in a state of perpetual growth. Amazing as it might sound, what I found is that we’re actually nearing the start of a miniature bust in the growth of the +65 age group in the U.S.
From 2012-2018 the country is projected to experience a 6 year decline in the +65 population. This is actually a shocking statistic that feels counter-intuitive, but makes a lot of sense once you sit down and think about what is occurring.
The chart below provides a graphical representation of what the U.S. Census believes the total +65 population will look like (in numbers) from now until 2030.
Why the bust? Why will this older segment of society actually contract for approximately 6 years of this decade? The easiest way to explain what is occurring is through an analogy. Imagine you’re on a boat or at the shore of an ocean. The one wave that is nearest you represents all those born and are still alive from the 1920’s and 1930’s. They’re a much older group and much closer to coming on shore (passing away) than the next wave that now is becoming visible.
The 2nd wave is the baby boomer generation. Though they are a huge group demographically speaking, they will slowly transition into the +65 range. Their wave isn’t near the point of cresting; it’s still building itself as moves into the +65 range.
A large portion of those people born in the 1920’s and 1930’s will pass away this decade. This will put downward pressure on the +65 population and thus make it a more youthful group. Near the close of this decade, the 20’s and 30’s babies will still be around, but constitute a much smaller portion of the +65 demographic. Therefore, they will not be able to sustain their downward pressure on the +65 range of the population.
Demographic trends can have profound implications for investors. Tomorrow I will discuss a few specific and general ideas I have for investors in coping with this mini-bust in the +65 population demographic in the U.S.