Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:


Population Aging Will Have Long-Term Implications for Economy; Major Policy Changes Needed

The aging of the U.S. population will have broad economic consequences for the country, particularly for federal programs that support the elderly, and its long-term effects on all generations will be mediated by how -- and how quickly -- the nation responds, says a new congressionally mandated report from the National Research Council.
The unprecedented demographic shift in which people over age 65 make up an increasingly large percentage of the population is not a temporary phenomenon associated with the aging of the baby boom generation, but a pervasive trend that is here to stay.

"The bottom line is that the nation has many good options for responding to population aging," said Roger Ferguson, CEO of TIAA-CREF and co-chair of the committee that wrote the report. "Nonetheless, there is little doubt that there will need to be major changes in the structure of federal programs, particularly those for health. The transition to sustainable policies will be smoother and less costly if steps are taken sooner rather than later."

Social Security, Medicare, and Medicaid are on unsustainable paths, and the failure to remedy the situation raises a number of economic risks, the report says. Together, the cost of the three programs currently amounts to roughly 40 percent of all federal spending and 10 percent of the nation's gross domestic product. Because of overall longer life expectancy and lower birth rates, these programs will have more beneficiaries with relatively fewer workers contributing to support them in the coming decades. Combined with soaring health care costs, population aging will drive up public health care expenditures and demand an ever-larger fraction of national resources.

Population aging is also occurring in other industrialized nations, so any consequences for the U.S. must be considered in the broader context of a global economy. Adapting to this new economic landscape entails costs and policy options with different implications for which generations will bear the costs or receive the benefits. Recent policy actions have attempted to address health care costs, but their effects are as yet unclear. According to the report, the ultimate national response will likely be some combination of major structural changes to public support programs, more savings during people's working years, and longer working lives.

"The nation needs to rethink its outlook and policies on working and retirement," said Ronald Lee, professor of demography and economics at the University of California, Berkeley, and committee co-chair. "Although 65 has conventionally been considered a normal retirement age, it is an increasingly obsolete threshold for defining old age and for setting benefits for the elderly." The committee found that there is substantial potential for increased labor force participation at older ages, which would boost national output, slow the draw-down on retirement savings, and allow workers to save longer. The report adds that longer working lives would have little effect on employment opportunities for younger workers, productivity, or innovation.

In addition, workers can better prepare for retirement by planning ahead and adapting their saving and spending habits, the report suggests. Improved financial literacy will be critical, since between one-fifth and two-thirds of today's older population have not saved enough for retirement and therefore rely heavily on Social Security and Medicare.

More research in areas such as health measurement and projections, capacity to work, and changes in consumption and saving will help to inform decision making, but the report emphasizes the need to act now in order to craft a balanced response.

"Population aging does not pose an insurmountable challenge provided that sensible policies are implemented with enough lead time to allow people, companies, and other institutions to respond," Ferguson said.

A follow-up study from the National Research Council will look more in-depth at the long-term macroeconomic effects of population aging and provide quantitative assessments of specific policy choices.

The study was sponsored by the U.S. Department of Treasury with supplemental funding from the National Institute on Aging. The National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies. They are private, nonprofit institutions that provide science, technology, and health policy advice under a congressional charter. The Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering. For more information, visit A committee roster follows.


Lorin Hancock, Media Relations Officer
Lauren Rugani, Media Relations Officer
Shaquanna Shields, Media Relations Assistant
Office of News and Public Information
202-334-2138; e-mail
Additional resources:
Report in Brief

Pre-publication copies of Aging and the Macroeconomy: Long-Term Implications of an Older Population are available from the National Academies Press; tel. 202-334-3313 or 1-800-624-6242 or on the Internet at Reporters may obtain a copy from the Office of News and Public Information (contacts listed above).

Division on Engineering and Physical Sciences
Board on Mathematical Sciences and Their Applications
Division of Behavioral and Social Sciences and Education
Center for Economics, Governance, and International Studies
Committee on the Long-Run Macroeconomic Effects of the Aging U.S. Population
Roger W. Ferguson Jr. (co-chair)
President and CEO
Teachers Insurance and Annuity Association-College Retirement Equities Fund
New York City
Ronald Lee1 (co-chair)
Professor of Demography and Jordan Family Professor of Economics
University of California
Alan J. Auerbach
Professor of Economics and Law, and
Baruch Center for Tax Policy and Public Finance
University of California
Axel Boersch-Supan
Professor of Macroeconomics and Public Policy
Mannheim Research Institute for the
Economics of Aging
University of Mannheim
Mannheim, Germany
John Bongaarts1
Vice President and Distinguished Scholar
The Population Council
New York City
Susan M. Collins
Joan and Sanford Weill Dean of Public Policy and Professor of Economics
Gerald R. Ford School of Public Policy
University of Michigan
Ann Arbor
Charles M. Lucas
Osprey Point Consulting
Deer Isle, Maine
Deborah J. Lucas
Distinguished Professor of Finance
Sloan School of Management
Massachusetts Institute of Technology
Olivia S. Mitchell
Professor of Insurance and Risk Management, and
Executive Director
Pension Research Council
The Wharton School
University of Pennsylvania
William D. Nordhaus1
Sterling Professor of Economics
Yale University
New Haven, Conn.
James M. Porterba
Professor and Associate Head
Department of Economics
Massachusetts Institute of Technology
John W. Rowe2
Department of Health Policy and Management
Mailman School of Public Health
Columbia University
New York City
Louise M. Sheiner
Senior Economist
Federal Reserve System
Washington, D.C.
David A. Wise
Professor of Political Economy
John F. Kennedy School of Government
Harvard University
Cambridge, Mass.
Kevin Kinsella
Study Director
1 Member, National Academy of Sciences
2 Member, Institute of Medicine

Lauren Rugani | EurekAlert!
Further information:

More articles from Social Sciences:

nachricht New population data provide insight on aging, migration
31.08.2016 | International Institute for Applied Systems Analysis (IIASA)

nachricht PRB projects world population rising 33 percent by 2050 to nearly 10 billion
25.08.2016 | Population Reference Bureau

All articles from Social Sciences >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: New 3-D wiring technique brings scalable quantum computers closer to reality

Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.

"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...

Im Focus: Scientists develop a semiconductor nanocomposite material that moves in response to light

In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.

A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...

Im Focus: Diamonds aren't forever: Sandia, Harvard team create first quantum computer bridge

By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.

"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...

Im Focus: New Products - Highlights of COMPAMED 2016

COMPAMED has become the leading international marketplace for suppliers of medical manufacturing. The trade fair, which takes place every November and is co-located to MEDICA in Dusseldorf, has been steadily growing over the past years and shows that medical technology remains a rapidly growing market.

In 2016, the joint pavilion by the IVAM Microtechnology Network, the Product Market “High-tech for Medical Devices”, will be located in Hall 8a again and will...

Im Focus: Ultra-thin ferroelectric material for next-generation electronics

'Ferroelectric' materials can switch between different states of electrical polarization in response to an external electric field. This flexibility means they show promise for many applications, for example in electronic devices and computer memory. Current ferroelectric materials are highly valued for their thermal and chemical stability and rapid electro-mechanical responses, but creating a material that is scalable down to the tiny sizes needed for technologies like silicon-based semiconductors (Si-based CMOS) has proven challenging.

Now, Hiroshi Funakubo and co-workers at the Tokyo Institute of Technology, in collaboration with researchers across Japan, have conducted experiments to...

All Focus news of the innovation-report >>>



Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

Agricultural Trade Developments and Potentials in Central Asia and the South Caucasus

14.10.2016 | Event News

World Health Summit – Day Three: A Call to Action

12.10.2016 | Event News

Latest News

Resolving the mystery of preeclampsia

21.10.2016 | Health and Medicine

Stanford researchers create new special-purpose computer that may someday save us billions

21.10.2016 | Information Technology

From ancient fossils to future cars

21.10.2016 | Materials Sciences

More VideoLinks >>>