The question above is not just a bad line from a post-apocalyptic movie, but more a query about what 2060 might actually look like. There is a lot of talk about longevity in financial planning in connection with planning retirement income, and the long-term care aspects of living into later years. What seems to be missing in the debate is the fact that the replacement rate (births compared to deaths) in the EU and the more important worker rate is going to fall. The worker rate relates to the number of people working compared to those not working; which currently stands at around 1 in 4 and is set to change to 1 in 2 by around 2060.
Many countries are likely to see a fall in population by 2060. This includes major European countries including Germany, Greece, Spain, Hungary, Poland and Portugal. The impact this will have, and what it will mean for us all must be taken into consideration.
Lots of questions present themselves: On the housing front who buys that larger family house when part of the plan is to downsize? If we build lots of houses today will we need them all eventually tomorrow? A fall in population could potentially lead to a price crash as the supply of houses far outweighs the demand.
So what future balance do we strike between benefits and taxation? We know already that the state retirement age only goes one way from here, and the cost of healthcare (and the knock on value of healthcare companies) could easily be impacted.
Demographics are one of those trends you do not want to bet on the wrong side of. In short they do tend to create big sweeping forces that change the rules for everyone. On the flip side not considering the changing demographics can be short-sighted and expose vulnerabilities.
2060 sounds like a long way away, but how does age 75 sound? To put all of this in context just consider that today’s 30-year-old will be that person. So the upshot of all of this is that considering financial planning is important now whatever your age. To find out how The Fry Group can help you please contact us.