As the global population ages, retirees will need better health and social care options, more assisted-living housing, and flexible retirement solutions. That's good news for investors.
We are getting older and also richer, at least in the developed world. The global  population has exploded over the last 75 years, growing from 2.5 billion people in 1950, to over eight billion now. That figure could rise to 10.4 billion by 2080.
Yet the pattern of this growth is far from uniform, although it's based on significantly lower mortality rates everywhere. Parts of Asia and Africa are still seeing high birth rates, and as a result, many more young people. In Europe, North America and Japan on the other hand, populations are ageing rapidly due to the collapse in the rate at which babies are being born.Â
Overall, by 2050, the number of people over age 65 is projected to be more than twice the number of children under five, driven by the continuing decline in the birth rate. As LGT senior equity analyst Dr. Tilman Dumrese explains, "It is an avalanche that's moving in slow motion."
Meeting the medical demands of living longer
An ageing population presents societal and economic challenges for governments and businesses. As life expectancy increases, so too does the likelihood that people will be living longer with chronic diseases like diabetes, heart problems, and cancer. Longer lives also imply longer retirements, with the attendant requirement for better pension provision and age-appropriate housing.Â
Dr. Tilman Dumrese, Senior Equity Analyst at LGT Private Banking
Businesses across many industries are pivoting to address these challenges. Take the pharmaceutical industry, for instance. Scientific advances, especially in genomics, are encouraging drug manufacturers to create new diagnostic tests and therapies that can provide truly personalized medicine.Â
One of the most successful developments so far is the ability to predict the chances of success of a given cancer therapy for a particular patient in advance of treatment, rather than relying on trial and error to find out if it works or not. This is obviously a huge advantage for the patient, the pharma company, the healthcare provider, and any medical insurer, in the highly cost-sensitive health spending market.
The silver society is facing health challenges in ever greater numbers.
According to Dumrese, it isn't just drugs and diagnostics that are leaping ahead. Â Medical technology manufacturers, including those supporting the care of non-communicable diseases like heart and eye conditions, are working on developing treatments that can be scaled using software solutions and artificial intelligence. The focus is on leveraging technology to address the health challenges that the so-called silver society is facing in ever greater numbers.
As healthcare providers develop new and better ways to support longer lifespans, the costs of this care continue to grow. According to OECD forecasts, healthcare spending is expected to rise faster than GDP in developed countries. Commercial healthcare and nursing facilities are likely to be among the beneficiaries.
The healthcare industry already faces a shortage of workers. Ongoing demographic change, resulting in fewer people of working age alongside the growing retiree population, is exacerbating this trend. So robotics and artificial intelligence will be in high demand in healthcare and many other industries. Companies focused on the automation of work processes will benefit from this ongoing structural shift.
An ageing workforce presents specific issues for policymakers. If fewer younger workers are available, many industries will need to find ways to replace repetitive, heavy labour wherever possible. Robotics offers an alternative to often less acceptable solutions like promoting immigration, or raising the age of retirement. The global market for industrial and service robots is predicted to exceed USD 500 billion in 2030, up from just USD 45.3 billion in 2020. Industrial companies with a clear focus on mechanical engineering are likely to benefit.
Healthy lifestyles don't come cheap
The increased awareness of healthy lifestyles continues to favour market growth in products that support this trend. Anti-obesity drugs have been a post-pandemic success story. And global market volumes of organic food and beverages are slated to grow at a compound rate of 13 per cent through to 2030 from a current base of USD 200 billion today. Dietary supplements will also benefit from accelerated growth.Â
Older, retired people in developed and developing countries have more leisure time, and often bigger bank balances. While the travel industry was particularly hard hit during the covid crisis, and is taking a while to bounce back, Dumrese forecasts that "the desire to travel remains unabated and should continue to generate demand in the future. That means that the long-term prospects for this industry remain intact."
The growing assisted living sector
Finally, investors should not overlook the growing need for financial solutions that help people prepare for what could be 25 to 30 years of retirement, possibly including a period of nursing care at the end. Providers of pensions and life insurance products are likely to benefit from the growing need for security in old age. The fact that not all countries offer modern social security systems means that the need for private pension solutions is a further growth driver for the financial services  industry.
Older people have different housing needs to students or young families. Some property companies in the US and the UK are now focusing on the growing assisted living sector. Serving a largely self-funded clientele, developers are creating communities that offer continuity of care extending from independent living for the "young-old" of 55-plus, through outpatient medical facilities, to nursing and end-of-life care. This approach allows older couples to live together even if they have quite different needs. Other companies are focusing on specific segments, such as assisted living, hospice care, or nursing facilities.Â
Whether in the healthcare, automation, wellness, travel, financial services, or property industries, investors overlook the power of the grey pocketbook at their peril. It's a trend fuelled by demographic change that will be with us for decades to come.
Market information from our research experts
The essential information on business, investments and finer things in life
LGT’s experts analyze global economic and market trends on an ongoing basis. Our research publications on international financial markets, sectors and companies help you make informed investment decisions.
This publication is a marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.
The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).
LGT Group Holding Ltd., Herrengasse 12, 9490 Vaduz, Liechtenstein is responsible for compilation and distribution of this publication on behalf of the following financial services institutions:
LGT Bank AG, Zweigniederlassung Deutschland, Maximilianstrasse 13, 80539 Munich, Germany. Responsible supervisory authorities: Liechtenstein Financial Market Authority (FMA), Landstrasse 109, P.O. Box 279, 9490 Vaduz, Liechtenstein; German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht BaFin), Graurheindorfer Str. 108, 53117 Bonn, Germany, Marie-Curie-Strasse 24-28, 60439 Frankfurt am Main, Germany;
LGT Bank AG, UK Branch, Cornhill 14, London EC3V 3NR, United Kingdom; Responsible supervisory authorities: Liechtenstein Financial Market Authority (FMA), Landstrasse 109, P.O. Box 279, 9490 Vaduz, Liechtenstein; Financial Conduct Authority (FCA), 12 Endeavour Square, London E20 1JN, United Kingdom; in the United Kingdom (UK), LGT Bank AG (FRN 226697) is solely authorised and regulated by the Financial Conduct Authority (FCA) as a wealth management firm. LGT Bank AG is not a dual-regulated firm, and therefore is not authorised by the Prudential Regulation Authority (PRA) and does not have permissions in the UK to accept deposits;
LGT (Middle East) Ltd., The Gate Building (East), Level 4, P.O. Box 506793, Dubai, United Arab Emirates, in the Dubai International Financial Centre (Registered No. 1308) is regulated by the Dubai Financial Services Authority (DFSA), Level 13, West Wing, The Gate, P.O. Box 75850, Dubai, UAE, in the Dubai International Financial Centre.
Information related to LGT (Middle East) Ltd.
Where this publication has been distributed by LGT (Middle East) Ltd., related financial products or services are only available to professional investors as defined by the Dubai Financial Services Authority (DFSA). LGT (Middle East) Ltd. is regulated by the DFSA. LGT (Middle East) Ltd. may only undertake the financial services activities that fall within the scope of its existing DFSA license. Principal place of business: The Gate Building (East), Level 4, P.O. Box 506793, Dubai, United Arab Emirates, in the Dubai International Financial Centre (Registered No. 1308).
Related content
Investment strategy
What does the US Inflation Reduction Act mean for pharma?
Should investors be worried that pharma price cuts in the United States will make the sector less attractive?
Investment strategy
Car manufacturers shift gears to profit from your data
Who knows you best? Your partner? Your parents? Your best friend? If you bought a new car recently, it’s none of the above: it’s your four-wheeled friend, or foe, depending on how you feel about data collection and privacy.
Financial knowledge
Positive performance in any market?
An absolute return approach seeks positive performance in any market environment, providing stability and predictability. But these are complex and risky strategies requiring a high degree of skill from the investment manager.
