An aging population sounds like a gentle, gradual thing. 

Economically, it is one of the most powerful forces of the century.

When the share of older people rises and the share of workers falls, the arithmetic of pensions, healthcare, and growth changes in ways that are hard to reverse, because they are locked in by births that happened, or did not happen, decades ago.

The single number that captures the shift is the old-age dependency ratio, and it is climbing fast.

TL;DR

• In the OECD, the old-age dependency ratio, the number of people 65 and over per 100 of working age, rose from 19% in 1980 to 31% in 2023 and is projected to reach 52% by 2060.
• The imbalance is structural. Between 1960 and 2022, the population aged 65 and over grew at 2.2% per year, while the working-age population grew by merely 0.9%.
• The economic cost is real. Without decisive policy action, GDP per capita growth in the OECD would slow by about 40%, and by 2060 the working-age population would decline by 8% while pension and health spending would rise by 3% of GDP.

The data below are from the Population Reference Bureau. 

Top 50 Countries With the Largest Number of Older Adults

ALSO READ: Is the World Really Overpopulated? What Data Tells Us

From five workers per retiree toward two

The dependency ratio translates into a simple, sobering picture. 

A ratio near 20% meant roughly five working-age people for every retiree. 

A ratio heading toward 52% means closer to two. 

Fewer workers must support more retirees, which strains pay-as-you-go pension systems, in which today’s workers fund today’s pensioners. 

The pressure lands hardest on the countries furthest along. 

The working-age population is projected to fall by more than 30% over the next 40 years in Estonia, Greece, Italy, Japan, Korea, Latvia, Lithuania, Poland, the Slovak Republic, and Spain.

No easy fix

Every proposed solution helps at the margin, but none fully solves the problem. Raising the retirement age is the most direct lever, yet the scale required is daunting. 

Stabilizing the old-age dependency ratio between 2015 and 2050 would require an increase in retirement age of a stunning 8.4 years, far more than the projected increase in longevity. 

Immigration helps by adding workers, but the consensus is that it can slow aging without preventing it. 

That leaves productivity, higher employment among older workers, and hard fiscal choices.

ALSO READ: Why Birth Rates Are Falling Everywhere

ELI5

As people live longer and have fewer children, there are more retirees and fewer workers to support them. 

In wealthy countries, the number of retirees per 100 workers has doubled since 1980 and continues to rise. 

That makes it harder to pay for pensions and healthcare, and there is no easy way to fix it.

Sources:

OECD | OECD ECOSCOPE | CEPR