The world is aging. Over the last 40 years the world has seen an enormous decline in the dependency rate - the ratio of dependents to working age people. This ratio was rising until 1965 because of increased child survival and rising youth dependency. From 1965 to today the ratio has been declining because of rapidly declining fertility around the world and falling youth dependency. But now aging is setting in. People are living longer and low fertility means smaller youth, and working age, cohorts coming behind them. On current forecasts the the world will have just two children per women by 2020 meaning that population levels will start to decline and younger cohorts will be smaller than the elderly cohorts they follow. By 2030 the word dependency rate will start rising again as old age dependency rise. Some countries can alleviate population aging by immigration but by 2030 aging will be a global phenomenon, with both China and India, as well as Europe and Japan aging rapidly,
But not all is lost. It is true that we are living longer, but is is healthy aging. The elderly are only dependents in the dependency ratio if the working age population have to support them. If the elderly keep working, or save for their own old age, they support themselves. And they can keep working. We are seeing a "compression of morbidity" the age of onset of physical and cognitive decline is getting later, and in fact the period that people live in old age with disabilities is declining in length, even as life span increases. This means that older people today are more able to work then their parents and grandparents. Of course they do not have to work, but this decision should be theirs based on their savings. We need a basic pension to prevent extreme poverty in old age, and we need compulsory savingspension contributions to make sure everyone, even the feckless save for retirement, but the decision about when to retire should be an individual decision.
Long healthy life spans are one of the greatest achievements of the last hundred years. We think of aging as a problem only because we have institutions, such as pay as you go pensions, that are designed for people with short lifespans. Rather than think of aging as a problem we need to celebrate it as a achievement and change our institutions to suit or new found longevity.
Graph: Dependency ratio 1950-2050 - ratio of those 0-14 plus those 65+ to people aged 15-64. Data Source: United Nations World Population Prospects 2008, Low fertility variant. I think the low fertility variant is more plausibel than the medium fertility variant.