Governments, Policy Makers, and Multilateral Organizations
Hot Topics
- Key publications and information sources
- Increasing longevity and policies related to retirement age
- Measuring financial health and financial well-being
- Economic contribution of older adults (Third Demographic Dividend)
- Examples of innovative government initiatives in different countries
Please see Definitions for detailed definitions of various terms used here. Please also refer to the Resources page for recommendations on longevity-related research labs and institutes, books, podcasts, academic papers, blogs, and press articles.
The world’s population is ageing. With birth rates falling and life expectancies rising in recent decades, the global population aged 65 and above now exceeds that under age 5. Some refer to this demographic shift as a silver tsunami, a term that equates population ageing with a natural disaster, while others think of it as the Third Demographic Dividend.
The age wave is not a silver tsunami —it is a silver lining, yielding golden dividends.
While increasing longevity is creating strains on institutions from pensions to the social security systems, countries that plan ahead are likely to find better solutions. When it comes to supporting vast portions of a population in promoting financial health and financial well-being, it becomes essential for governments and policymakers to get involved.
Financial well-being is not just about individual behavior but also the policies and systems shaping people’s financial lives. Managing this demographic shift well requires new policies, new models, and perhaps new institutions.
Governments and policymakers globally are deploying different solutions to help their populations not only live longer and healthier but also happier and more fulfilling, and financially secure lives. Many believe that the success of countries should be judged by the happiness of their people. The United Nations General Assembly adopted a resolution in 2013, proclaiming 20 March to be observed annually as International Day of Happiness. The World Happiness Report has some good suggestions on measuring national happiness and what should be done over the next decade.
For examples of innovative initiatives in promoting and managing the financial well-being of older adults, please refer to the Useful References section below for examples from Singapore, Japan, Taiwan, South Korea, and the United Kingdom.
A major work-life transition point
Old age is a significant transition point in life when occupational mobility occurs with similar frequency as it does among younger people. Older adults are also at a relatively high risk of poverty. However, the problem of unemployment among older adults did not receive as much attention in the past as that of young people in developed countries with well-developed pension systems, as the gap between retirement and eligibility for pension benefits was short. Many people had sufficient pension funds, savings, and assets to live on. This is rapidly changing.
More and more people are working in gig roles and unstable employment forms during their youth and prime of life, and thus unable to accumulate sufficient savings or be eligible for pensions in their old age. There is a need for social systems and policies that enable people who must continue to work for economic reasons to find work easily, regardless of their age.
Financial Inclusion and Financial Wellness
As per the World Bank Findex report, 76 percent of all adults globally were financially included in 2021. This implies that 24 percent, or 1.4 billion adults globally, were still financially excluded and lacked access to basic financial services [World Bank Findex]. Another 45 percent had basic accounts but did not have access to diversified investment and savings options, low-cost payment systems, insurance, or credit.
For detailed definitions and the latest data, refer to the FAQ titled ‘Financial Inclusion and the World Bank Findex Report.’
The resulting poor financial wellness – indeed, for many households and small businesses, the resulting financial insecurity – is not just a low-income bottom-of-the-pyramid problem in developing economies. It has been democratized with growing income inequalities in developed economies too, and now is an issue for nearly half the American population.
Achieving financial inclusion and financial security is not an end in itself but a means to an end. It is broadly recognized as critical to reducing poverty and achieving inclusive economic growth. It also positively affects consumption, employment status and income, and some aspects of physical and mental health.
For policymakers and influencers in this field, some existing reports and information sources for your research
WHO Reports: An excellent starting point is the detailed World Report on Ageing and Health published in 2015. This report addresses the overall lack of consideration for ageing and health and inspects the global impact on populations and societies. The WHO published a follow-up report titled Global Strategy and Action Plan on Ageing and Health in 2017. The reports provide a lot of information on an individual’s functional capacity and the correlation with environmental factors such as policies, systems, and services related to transport, housing, social protection, and other factors related to financial health and well-being and older adults. The reports also outline a framework for globally coordinated action on this matter.
United Nations Report: Another helpful report is the United Nations World Population Ageing 2020 report, a comprehensive document that examines global population trends related to ageing. It highlights the increasing number of older adults worldwide and discusses the related social, economic, and health implications. The topics covered include ageing patterns, life expectancy, fertility rates, and the impact on families. It emphasizes the need for policies and strategies to address the challenges and opportunities that come with population ageing.
Interdisciplinary Joint Academy Initiative on Aging in Germany: A comprehensive report titled More Years, More Life, Recommendations on the Joint Academy Initiative on Aging was published in Germany. The report presents a set of recommendations based on a central hypothesis that the extension of the human lifespan opens up possibilities for harnessing progress and development. With additional years of life, there are numerous avenues to explore, including individual life concepts, intergenerational coexistence, and the overall sustainability of societies.
Economic Contribution of Older Adults
Academics usually talk about the first and second demographic dividends. Professor Linda Fried of Columbia University talks about the Third Demographic Dividend and calls it the greatest opportunity of the twenty-first century. One of the most cited papers on the economic contribution of older adults is Valuing Productive Non-market Activities of Older Adults in Europe and the US. It estimated that contributions of older adults in these countries added to the equivalent of 7.3 percent of gross domestic product (GDP).
The report, The Longevity Economic Outlook, by the Economist Intelligence Unit (EIU) for AARP calculates the contribution to the 50+ age group at USD 8.3 trillion, or 40 percent of the US GDP. Another important paper is Population Aging and the Three Demographic Dividends in Asia, published by the Asian Development Bank, covering Japan, South Korea, Taiwan, and Malaysia.
For additional information and details about the papers cited above, refer to the FAQ titled ‘Economic Contribution of Older Adults (Third Demographic Dividend).’
Measuring Financial Health and Financial Well-Being of Individuals
Financial well-being is not just about avoiding financial problems but also about having the ability to recover from them. Many different metrics and definitions for measuring this exist., and two of the most comprehensive ones are CFPB’s reports on Financial Well-Being in America since 2017, and the US Federal Reserve’s annual SHED survey reports on the ‘Economic Well-being of US Households’ since 2013. For details, including results published in 2023, refer to the FAQ on ‘Measuring financial well-being: CFPB and Federal Reserve metrics.’
It would be beneficial and illuminating for other countries to follow suit with similar detailed data gathering and reporting over long periods to understand the issues and challenges, and respond by initiating policy changes accordingly.
Policies Related to Mandatory Retirement Age
In most countries, policies related to mandatory retirement age have not kept pace with increased longevity, and people continue to retire between the age of 60 to 65. It isn’t easy to support a 30 or 40-year retirement with savings from a 40-year career. This has resulted in financial insecurity among potential retirees. In addition, the widespread issue of inadequate or nonexistent pension schemes in many countries has compounded the problem.
Several governments and quasi-government entities have embarked on policy changes and innovative initiatives to promote productive and purposeful longevity. Japan and Singapore are two of the fastest-ageing societies in the world and have been forging ahead to address the various issues related to longevity amongst the population, including financial well-being, healthy ageing, and ageing in place.
An excellent example is Singapore which passed the Retirement and Re-employment Amendment Bill (RRA) in 2022, raising the minimum retirement and re-employment ages from 62 and 67, respectively, to 63 and 68, effective July 2022. For people who are willing and able to work longer, the minimum statutory retirement and re-employment ages will be set at 65 and 70, respectively, by 2030. Under the Retirement and Re-employment Bill (RRA), dismissing an employee based on age is also prohibited. This protection applies to Singapore citizens and permanent residents who are employed before age 55.
For additional examples of innovative initiatives in promoting and managing the financial well-being of older adults, please refer to examples from Singapore, Japan, and the United Kingdom under Useful References below.
Raising Awareness in Schools
Talk about starting early!
New York City’s Department for the Ageing is working with the Department of Education to launch a new effort to curb discrimination against the city’s oldest residents — by educating some of its youngest. Thirteen different schools in Brooklyn, New York, are bringing young scholars in touch with their older counterparts to educate them on the concept of “ageism”.
The Department for the Aging has created a resource guide that distinguishes between “structural” ageism in institutions like healthcare, and “interpersonal” ageism, which can include dismissive comments and stereotypes. The guide also includes suggestions for lessons, including oral history projects where students interview older adults about their lives, and videos that debunk some common stereotypes about older adults, especially around their physical fitness.
