Can we afford to age?

Susan St John

University of Auckland

2nd National Gerontology Conference

What are we afraid of

Timebomb?

Destitution?

Loss of dynamism?

Economic problems today

We are a highly indebted nationHigh interest ratesLow trend rate of growthUnskilled workforceEmigration of skilled workersBoom bust cycleLow confidence

How different will things be 30 years out?

Babyboomers aged 65-84

Median age approaching 45

Labour force will have aged

Demographic change

Demographic Dependency Ratios1901 - 2101

Medium fertility, medium mortality and long-term annual net migration level 5,000

What are high dependency ratios like?

1960s Pressure on kindergartens, schools,

housing, medical care

Did we cope?– Halcyon days of (almost) free health care,

Plunket, free milk in schools, free education apple pie and motherhood!

Demographic Dependency Ratios1901 - 2101

Medium fertility, medium mortality and long-term annual net migration level 5,000

Dependency ratios again hit the level of 1960s by 2030

People of 65-75 fitter than before

Older people create social cohesion

Older people remain active and contributing

Increasing importance of technology

Can we afford to age?

PensionsHealthcare, long term careOther servicesHousing stock TransportationSewerage and clean water

What are the pluses?

Demand will be high as in the 1960sLess crimeFewer childrenLess testosterone

Fewer fast cars and accidentsLess pollution

Can we plan today to meet the pressures of ageing?

Can we save up for the future?

What is the economic problem?

5 1

2000

What is the economic problem?

5 2

2030

Net cost of NZS

0

2

4

6

8

10

12

1980 1990 2000 2010 2020 2030 2040 2050

Estimates of total tax/GDP

20

25

30

35

40

45

1995 2005 2015 2025 2035 2045

Central Semi-wage index and targeting Increasing age and targeting

What is the economic problem?

5 2

2030

How can the division be made less painful?

Improve labour productivity

Keep more over 65s actively contributing

Value the unpaid output

Ratchet down expectations

What might prefunding achieve?

Make division less painful

Make the babyboomers pay more today

Improve security

Other considerations

The share market may flourish

Overseas assets may be a protection

NZ may look more like the rest of the world

Conclusion

Ageing should be celebrated

Brains not brawn may increasingly matter

Older people aid social cohesion

Prefund, stop complaining and pay more tax

Learn to do with less