Shifting Consumer Trends for an Aging Population

Individuals over age 65 are set to double by 2050

These global demographic trends are likely at an inflection point. The number of people under age 19 has already crested, evidence that total global population is headed toward a peak. Half of all countries in the world have a fertility rate below the replacement level of 2.1 births per woman.

The shifts will be a major challenge for policymakers, as a declining working-age population exacerbates the risk of labor shortages and creates potential fiscal pressures for governments. The fastest growing sectors of the economy are also poised to change due to the aging demographics. Demand is likely to rise for healthcare, senior living and care, and certain types of entertainment and experiences, Goldman Sachs Research analyst Evan Tylenda writes in the team’s report.

Global population growth by age group

“Healthcare providers are set to benefit from shifts in spending associated with an aging population,” Tylenda writes. “We expect continued rising expenditures on nursing care facilities, residential long-term care facilities, home care, and rehabilitation services, particularly as life expectancy continues to rise.” Another area where spending could increase is for the types of entertainment and experiences that seniors favor.

Goldman Sachs Research identifies specific industries and companies that are expected to grow due to the demographic trends and related changes in spending:

Healthcare: As the population of older people surges in the coming decades, “increases in both personal and public spending on healthcare will be required to treat common health issues for an aging population,” Tylenda writes. This may boost demand for medical technology companies, pharmaceutical makers with age-related treatments, and healthcare providers focused on age-related issues.

In the US, people over the age of 65 account for 36% of health spending, according to the Medical Expenditure Panel Survey, despite making up only 18% of the population. Among seniors, per capita personal healthcare spending soars for cardiovascular disease, neurological disorders, diabetes, and a range of other conditions, compared with younger people.   

Senior living: Demographic tailwinds may also increase demand for operators of nursing care and residential long-term care facilities and providers of rehabilitation services. Spending on nursing care in the US has been rising since 1960, but today there are still not enough facilities to accommodate the aging population. The UK is estimated to have a senior housing shortfall of more than 30,000 units within three years. Italy, Germany, and France lack sufficient nursing facility beds for their aging populations.

At the same time, most seniors age at home, whether alone, with a spouse, or in a living arrangement with family members. In the US, just 2% of those over age 65 are in a group or care facility. Given this, demand is likely to grow for home care services such as medication management, telehealth services, and hygiene.

Entertainment and experiences: Older populations spend their time and their wealth differently than younger people. Individuals over age 60 make up a third of all cruise ship bookings, for example, and 47% of all recreational vehicle (RV) users are over 55 years old. Motorcycle makers and sellers may also see a boost from older individuals. In the UK for example, nearly two thirds of motorcycle driving licenses are held by those over age 55.

As the population grows older, potential labor shortages could add pressure on industries that service this budding demographic. Goldman Sachs Research points out that governments and companies may react by, among other things, seeking to increase labor force participation by women, promoting education and skills development for those of working age, and increasing immigration. Automation, humanoid robots, and artificial intelligence could also be employed as tools to help ease the pressure.