[Podcast] Australia’s aging population crisis is almost upon us, with Simon Kuestenmacher

If you're a regular listener to this podcast, you know that I often say demographics will drive our destiny, not just with regard to property, but for Australia and the world as a whole.

In today’s podcast, I chat with leading demographer Simon Kuestenmacher about the composition of Australia’s population moving forward.

It seems we're going to have more older people and proportionately fewer young people, so how do we grow our economy with fewer young people, and what does falling birth rates mean?

If you’ve heard my chats with Simon before, you’ll know he shares great insights, so if you’re interested in property investment, or just the future of our country and how it will relate to you your job and your prosperity, I'm sure you'll get benefit from our discussion.

What does the aging population mean for Australia?

Falling birth rates across nearly all the developed world and now much of the developing world have many demographers concerned.

While our planet is projected to be home to 9.8 billion people by 2050 – up from 7.96 billion today – a vast number of countries, from Europe to South-East Asia to the Americas, are dealing with decades of sub-replacement fertility, which means a total fertility rate (TFR) below the 2.1 required for a woman to replace herself and her partner. 

Australia, for example, has not had a fertility rate above 2.1 since 1976, and without generations of immigration, would have a much smaller, less diverse – and somewhat older – population than it enjoys today.

So, what's ahead for Australia’s population what does that mean for you and me as property owners, property investors, or businesspeople?

Aging population

Australia is home to 558,000 people aged over 85 years.

And in the last 20 years, this age group has actually doubled in size.

What’s ahead, and what are the implications?

• This is absolutely nothing compared to what’s about to hit us.
• In just 13 years, we’ll have to look after more than one million Australians aged over 85.
• Remember, 2035 is as far in the future as 2009 is in the past. This is happening soon. In another 18 years (2063), we will have reached two million people over 85. By 2080 we will have added yet another million.
• About half of the population aged 85-plus requires serious care services.
  • This means they need help with core activities and have several health issues that need attention.
    • Sometimes this care is provided for free by a family member but usually, professionals need to get involved.
    • Aging is labour-intensive.

Major concerns about Australia’s aging population

• How many of our future elderly will have saved enough money in their superannuation accounts to pay for their own retirement?
• The growing share of elderly who had low-income careers and don’t own a home
• They will run out of cash eventually.
  • This means we need to subsidize their retirement years through the pension scheme – potentially for decades.
• We are not quite sure how big of issue poverty in old age will be, but we know it’s going to be a huge problem.
• We have a duty of care for our elderly, but they will be a huge financial burden.
  • To shoulder that burden, we must grow the economy.

What options do we have to grow our economy?

• Mining
• High-skilled migrants

How is our Health Care System going to cope?

For decades now, Australia’s population has only increased because of immigration, which ground to a halt with the onset of COVID-19.

Can immigration by itself keep a population young?

Peak Humanity

When will the world reach its peak humanity?

When will we see the maximum of humans?

What will this mean for Australia?

Peak humanity might be as little as 3 decades away

How will Australia be positioned to succeed in an aging world?

• We have plenty of room to accommodate more young people.
• Workers will be a rare commodity by the 2070s.
• The pool of globally available migrants will start to shrink in about 50 years.
• Sources of migrants – low-income countries, middle-income nations, and high-income countries.
• We need to be encouraging international students to come to Australia and then eventually become permanent residents or citizens.

Links and Resources:

Simon Kuestenmacher - Director of Research at The Demographics Group

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Some of our favourite quotes from the show:

“Interestingly, over the late 20 years, this age group of people, the over 85’s, has doubled.” – Michael Yardney

“Well, it’s not just the pension, but it’s also the healthcare costs because as you get older, you use the healthcare system, and while many will have private insurance, Medicare and the government has to pay for that as well.” – Michael Yardney

“Remember, any problem in life that can be solved by money isn’t really a problem at all.” – Michael Yardney

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