Nation with aging populations rely on smaller pools of taxpayers to cover higher healthcare costs, pension benefits and other public expenditures, potentially crowding out private capital investment which would otherwise raise national income.
Recent innovations in healthcare, hygiene and sanitation practices and access to clean drinking water have allowed adults to live much longer lives than was common just a few generations ago.
Longevity
An aging population poses substantial financial strain on nations due to a reduction in working-age population and rising healthcare expenses, especially with chronic disease costs increasing with age. Furthermore, older women and people of color typically bear a disproportionately heavier financial burden from treating their diseases and incur higher annual costs from treating their wages are lost; their household incomes also decrease substantially due to these losses.
Longer life spans tend to run in families, suggesting genetic or lifestyle factors have an important impact. Furthermore, improved health positively impacts labour supply and can increase economic growth potential.
Therefore, it is of utmost importance to regularly publish national medical expenditure data for elderly populations, such as source and type of expenditure data. Furthermore, detailed information needs to be collected about cost and use of healthcare services for older adults most in need of care.
Age-related diseases
Age-related diseases place an enormous cost on economies worldwide, both through treatment costs and productivity losses. Furthermore, older people tend to live with chronic health conditions more frequently than younger ones which increases disability risks and reduces quality of life significantly – this trend being particularly evident in low and middle income countries where the proportion of adults over 60 has significantly increased over time.
While declining mortality rates have significantly extended life expectancies, many countries face rising healthcare costs as spending on elderly populations and lower tax revenues increase. Nations with large numbers of senior citizens rely on smaller pools of workers to cover higher health costs, pension benefits and other publicly funded programs.
West Health and Gallup researchers recently conducted a joint study that showed many older Americans struggle with rising healthcare costs. About one out of every four adults 65 or over reported cutting back on basic needs to pay for healthcare expenses.
Retirement
Retirement presents individuals with numerous decisions regarding when and how much to save for healthcare needs, from when they should stop working to how much savings for future health needs. Although seemingly straightforward decisions, such as when and how much one saves can have significant financial ramifications for years ahead. Individuals must also factor in Medicare coverage as well as any supplementary healthcare insurance such as Medigap; those looking to delay claiming benefits could opt to work part time or in flexible positions to increase income without diminishing workplace participation levels.
Bidewell, Griffin and Hesketh (2006) conducted an experiment and determined that as people near their preferred retirement age they become increasingly willing to sacrifice future income in order to retire early – this finding supports hyperbolic discounting theory.
Countries at an advanced stage of demographic transition tend to experience lower aggregate savings. To increase savings in such countries, generous public pension systems and targeted social assistance transfers should be increased in order to combat old-age poverty and boost savings.
Long-term care
Many older adults cover some or all of their long-term care costs from personal savings, investments and the proceeds from selling their home. Family members may provide or cover these costs – although low-income households face greater challenges in doing this.
Long-term care expenses, like hospitalizations, can be financially devastating if not prepared for. People without the appropriate coverage often either forgo care altogether, rely on informal caregivers at considerable expense, or make payments out of their own pocket until reaching impoverishment and qualifying for Medicaid assistance. As private long-term care insurance becomes more affordable to a greater proportion of elderly households through decreased premiums and/or enhanced inflation protection features of policies, more elderly households could potentially afford it in future.
