Re: Population ageing: the timebomb that isn’t?
I found Spijker and MacInnes's article fascinating. It's good to have assumptions about generally accepted "facts", such as the demogaphic timebomb, carefully challenged. However, there are some points which they didn't cover, which I think are relevant here.
Spijker and MacInnes state that 'The spending power of the “grey pound” has risen inexorably'. While that's undoubtedly true, I don't think we can make the assumption that it will continue to rise. Many of the current cohort of over 65s have benefited from a housing market which has largely served to transfer wealth from younger to older generations, and were also able to retire with generous final salary pensions. Those options are unlikely to be available to future generations of elderly people to the same extent, so we may find that the spending power of the elderly declines over the coming decades.
It's certainly also true that 65 year olds today are healthier than 65 year olds in previous decades, meaning that healthcare for the elderly may become less burdensome, but the other side to that equation is there is an assumption that over 65s will be more economically productive. The sad fact is that retiring at age 65 is a luxury that few will be able to afford in the future. Spijker and MacInnes mention the rise in the state pension age to 68, but that is surely just the start. If we are to avoid a demographic timebomb, as Spijker and MacInnes believe we will, then surely a key requirement is that the normal requirement age will rise significantly, and by the middle of the century it will be common for people to continue working well into their 70s and even 80s.
Maybe some would consider there is nothing wrong with that, but it's important to be clear that it will be necessary.
Finally, while it's true that the proportion of people of working age who actually work has increased, and that does indeed help, simply looking at the number of people in employment does not give the whole story. How many of those people work part time?
I enjoyed having some of my assumptions about population ageing challenged, but I still believe that, unless we are all happy to continue working well into our 70s, the economics of ageing remain an important societal challenge.
Competing interests: Looking wistfully at my parents, who were able to retire in their early 60s with index-linked final salary pensions, and knowing that there is no way I'm going to be able to do likewise unless I become exceedingly rich in the meantime.