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Friday, November 08, 2013

Information : The Growing World Retiree Market(Part III)

Marketing Challenges & Opportunities  (Part III)
By Mario G. Zavalla

In Parts I and II, we provided the background information  necessary for stakeholders of retirement products and  services  to acquire a deeper understanding of the present demographic and socio-economic attributes of the human population, its projected shifts and underlying  causes and effects of such shifts at the country and global levels. In this section, we shall continue to focus on this topic by presenting the conclusions and predictions contained in the report contribution of the Population Division of the United Nations to the 2002 Assembly on Ageing held in Madrid, Spain.  

In the last installments of this paper, we shall change our focus by examining closely the various opportunities …..and the many challenges which will invariably be faced by those venturing into businesses, particularly those related to real estate, targeting the ever-increasing number of world retirees.

Present and Future World Population Demographics

Global population ageing is a by-product of the demographic transition in which both mortality and fertility decline from higher to lower levels. Currently, the total fertility rate is below the replacement level in practically all industrialized countries. In the less developed regions, the fertility decline started later and has proceeded faster than in the more developed regions. Yet, in all regions people are increasingly likely to survive to older ages, and once there they are tending to live longer, as the gains in life expectancy are relatively higher at older ages. 

The older population is growing at a considerably faster rate than that of the world’s total population. In absolute terms, the number of older persons has tripled over the last 50 years and will more than triple again over the next 50 years. In relative terms, the percentage of older persons is projected to more than double worldwide over the next half century. However, notable differences exist between regions in the numbers and proportions at higher ages. Although the highest proportions of older persons are found in the more developed regions, this age group is growing considerably more rapidly in the less developed regions. As a consequence, the older
population will be increasingly concentrated in the less developed regions. 

The young-old balance is shifting throughout the world. In the more developed regions, the proportion of older persons already exceeds that of children, and by 2050 it is expected to be double that of children. In the less developed
regions, age-distribution changes have been slow but will accelerate over the next 50 years. Currently, the median age in the more developed regions is more than 13 years higher than in the less developed regions and almost 20 years higher than in the least developed countries. An increase in the old-age dependency ratio indicates a situation in which an increasing number of potential beneficiaries of health and pension funds (mainly those aged 65 and over) are supported by a relatively smaller number of potential contributors (those in the economically active ages of 15-64). This trend tends to impose
heavier demands on the working-age population (in the form of higher taxes and other contributions) in order to maintain a stable flow of benefits to the older groups. Even the sharp decline in youth dependency that has accompanied the increase in old-age dependency may not be enough to offset the increased costs, since the relative expense of supporting the old is, in general, higher than that of supporting the young. 

The continuing increase of the parent support ratio, on the other hand, implies that more and more frequently the young-old will find themselves responsible for the care of one or more oldest-old family members. Parent support ratios are lower in the developing regions, where public institutions for the support of the very old tend to be less fully developed. However, the ratio is
rising quite rapidly in the developing regions as well. 

As the numbers and relative proportions of the older population increase, their demographic characteristics are also changing. For instance, the older population is itself undergoing a process of demographic ageing. At the global level, the most rapidly growing age group is that aged 80 and over. Although the oldest-old still constitute a small proportion of the total population, their numbers are becoming increasingly important, especially in the less developed regions. In most countries, older women greatly outnumber older men. In many cases, the
difference is so large that the concerns of the older population should in fact be viewed primarily as the concerns of older women. This is especially true in the case of the oldest-old populations, as the female share increases markedly with age. Labour force participation among the older population has been declining worldwide. The participation rates remain considerably higher in the less developed than in the more developed regions, but the trend is towards lower levels of economic activity among older persons nearly everywhere. Worth noting is the increasing female share of the older work force as participation rates have decreased among older males. Although lower levels of labour force participation at older ages are usually a sign of higher levels of social security coverage, they may also result from other factors such as a shortage of employment opportunities and obsolescence
of skills and knowledge. 

Click picture to enlarge

Illiteracy remains high in the less developed regions among older people, especially women
and the oldest groups. Available evidence suggests that, as of the year 2000, only about half of all persons 60 and older in those regions were literate. However, a trend towards increasing literacy among older people can be observed for both sexes in virtually all countries of the world. This is a favourable development for the wellbeing of future older generations, since higher levels of education are associated with better health and economic status within the older population. 

As the twentieth century drew to a close, population ageing and its social and economic consequences were drawing increased attention from policy-makers worldwide. By that time, many countries, especially in the more developed regions, had already achieved population structures older than any ever seen in human history. In most cases, the ageing societies also experienced rapid economic growth during the second half of the twentieth century. While major shortcomings and unmet needs remained, most developed countries expanded and diversified their systems of social security and health care and, on the whole, the standard of living of the old as well as the young improved as populations aged. However, strains were building in those support systems, as the older population continued to grow much more rapidly than that of younger adults and as earlier withdrawal from the labour force added to the demands on public pension systems.

The twenty-first century will witness even more rapid population ageing than did the century just past. Worldwide, the percentage of the population aged 60 years or older increased by 2 points–from 8 to 10 per cent–in the second half of the twentieth century. During the first half of the twenty-first century, that percentage is projected to increase by 11 points, to 21 per cent. By 2050, the population of the less developed regions will have the same percentage of persons aged 60 years and over as the more developed regions did in 2000. The developing countries will also reach that stage over a much shorter period of time than that required by the more developed regions. In many cases, rapid population ageing will be taking place in countries where the level of economic development is still low.

Source :
Population Division of the United Nations

Graph and Picture Source :
United Nations Human Development Report 2011

About the Writer :

Mario G. Zavalla is a seasoned professional who has accumulated 30 years experience in middle and top management positions in private and government corporations  engaged in housing finance, commercial and investment banking, retirement promotions, manufacturing, management services and real estate development and marketing. After graduating from the Ateneo de Manila University, he took up MBA subjects at the Ateneo Graduate School of Business. 

He is a licensed real estate broker, a member of PAREB-Marikina Valley Real Estate Board Inc. and Philippine Institute of Real Estate Practitioners Inc. (PhilRES). He is an active online member of PAREB-MLS and PAREB Online  and runs his own real estate brokerage office using the trade name The LIST and SELL REALTY GROUP, the owner and operator of  The PHILISTINGS BANK.


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