What is the “Silver Tsunami”?
The United States is changing, and observant individuals may notice the nation is skewing a little older than it has in recent years. Estimates from the U.S. Census Bureau indicate roughly 56 million Americans had reached age 65 by 2020, which marked a nearly 39 percent increase since 2010. The increase in the population that has reached traditional retirement age has been dubbed a “silver tsunami,” and that increase could stretch government resources thin in the decades to come. In fact, a 2018 report from the Hutchins Center on Fiscal and Monetary Policy noted that the federal government could face considerable challenges as more of its budget is allocated to age entitlement programs such as Social Security and Medicare. That problem may not prove unique to the United States, as the United Nations estimates that the elderly population in Europe is expected to account for around 30 percent of all residents by 2050. Though entitlement programs differ from country to country, finding ways to successfully manage the silver tsunami could be imperative to various nations’ financial stability in the decades to come.
Changes that could arise from the “silver tsunami”
A report from the International Monetary Fund in the summer of 2023 indicated that a new challenge awaits the world in the coming years. The global population increased by one billion people between 2010 and 2022. That remarkable increase saw the world surpass the eight billion people mark in November of 2022.
Despite a sharp increase in the global population in such a short period of time, the IMF asserts that the population boom is not the most formidable demographic challenge facing the world. The IMF defines population aging as the most formidable challenge. Widely referred to as the “silver tsunami,” a term credited to the AARP, the increase in the number of individuals age 65 and older could lead to some unique changes in countries across the globe.
- Increased recreation spending: Sixty-five has traditionally been viewed as retirement age, and that remains an unofficial bar for individuals living in countries like the United States that have increased their official retirement age. Though an uptick in the aging population is often framed in terms of the challenges countries will face, that increase also could present some opportunities. For example, a recent AARP Longevity Economy Outlook report noted that people 50 and older account for the most spending on recreation and culture of any demographic. That could prove beneficial to businesses and regions that cater to consumers interested in recreation.
- Employment opportunities: The AARP also noted the role the 50 and older population plays in supporting jobs. In 2020, the demographic of people 50 and older supported roughly one-third of the world’s jobs and generated $23 trillion in labor income with its spending on goods and services. Estimates from the AARP indicate that individuals age 50 and older will support 1.5 billion jobs across the globe by 2050. The labor income impact by then will more than double to $53 billion.
- Employment challenges: Though the silver tsunami could help to maintain existing jobs and create plenty of new ones, employers might find it difficult to fill those positions. As more of the global population reaches retirement age, it bears noting that more workers will retire. Deloitte and the Manufacturing Institute note that the manufacturing sector will need to fill 2.5 million job openings related to retirements between 2020 and 2030. That could prove a sizable challenge, as the aging population is increasing at a time when the young population is decreasing.
The aging population is increasing, which could lead to a number of opportunities and challenges in the decades to come.
