A global shift: From youth to ageing populations

As global life expectancy continues to rise, the world is undergoing a profound demographic transformation. In 2023, people aged 50 and above outnumbered those under 15 for the first time. By 2050, over 1.6 billion people will be 65 or older (United Nations Department of Economic and Social Affairs, 2023, p. 19).

This shift has major implications for health, the economy, and public policy. Countries like Japan are set to see the old age dependency ratio (the proportion of people aged 65+ compared to those of working age) exceed 50%, doubling from historical norms.

A comparative bar graph showing the median age and old age dependency ratio across various countries. Countries like Japan have both a high median age and a high old age dependency ratio, indicating advanced population ageing, while others have younger demographics and lower dependency ratios.
Old Age Dependency Ratio
Source: New Zealand Treasury

The longevity economy: Turning ageing into opportunity

The “longevity economy” is defined by the rising economic and social participation of people aged 50 and above; in 2020, this demographic contributed USD 45 trillion to global GDP, around 34% of total GDP. That figure is only growing, especially as older adults become a key force in emerging consumer markets, particularly in emerging markets.

Far from being a burden, ageing populations could become one of the greatest untapped assets for innovation, productivity, and social progress.

Healthspan vs lifespan: The challenge of healthy ageing

Although people are living longer, many spend their final decade in poor health. Health-adjusted life expectancy is not keeping up with chronological longevity. This disconnect poses a significant barrier to realising the benefits of the longevity economy.

To tackle this, the McKinsey Health Institute proposes six key strategic shifts:

  1. Promote healthy ageing through preventive approaches
  2. Improve health measurement and real-time data use
  3. Scale evidence-based interventions
  4. Accelerate cross-sector innovation
  5. Unlock contributions across all industries
  6. Empower older adults to stay engaged and productive

These shifts must span all four dimensions of health: physical, mental, social, and spiritual. For instance, the Okinawan model shows how diet, movement, social connection and purpose contribute to a thriving older population.

A diagram showing how partnerships between employers, healthcare systems, insurers, and digital technology providers can support population health and economic prosperity. Boxes highlight initiatives such as predictive analytics for mental health, digital tool adoption (FemTech and AgeTech), wellness programmes, and community engagement. The outcome is improved health and reduced healthcare costs.
Wider Benefits of Improved Wellbeing
Source: Deloitte

Preventive health and policy reform: A crucial pivot

Most high-income nations still invest disproportionately in late-stage medical care. Yet only about 10% of preventable deaths in high-income countries are linked to deficiencies in medical treatment; far more are related to behavioural and social determinants.

Public Health Policy must pivot from reactive treatment to proactive prevention, supporting lifelong health. This includes investing early, enabling younger generations to age well. As the UK Economic Observatory notes, today’s children have a one in six chance of living to 100. The goal? Ensure they arrive at old age healthier, wealthier, and ready to contribute.

Reimagining work and retirement

Labour force participation among older adults is on the rise globally. In New Zealand, older adult employment has increased significantly, helping offset fiscal pressures from an ageing population.

Each additional year of working life is estimated to boost GDP by 1%. But raising the retirement age alone isn’t enough. We need:

  • Lifelong education
  • Flexible employment options
  • Age-inclusive workplaces

These are essential to ensuring older adults can remain active contributors to society.

A stacked bar chart comparing global population distribution by age group from 2020 to a future projection. The data shows a decline in the 0–14 age group and an increase in the 65+ population, signalling a global demographic shift towards older populations.
Population Growth Driven by Falling Adult Mortality
Source: Brookings Institution

Fiscal sustainability: Reforming transfers and care funding

Modelling suggests that aging could push New Zealand into unsustainable debt without policy reform unless mitigated by higher productivity and labour force participation among seniors. Currently, public transfers to seniors far exceed the tax contributions of this demographic.

A bar graph depicting average taxes paid and benefits received by New Zealanders across age groups as of March 2019. Young adults pay more in direct and indirect taxes than they receive in government support, while older adults (especially those over 65) receive significantly more in income support and in-kind benefits, highlighting fiscal pressure from an ageing population.
Tax and Transfer by Age Group in NZ (2019)
Source: New Zealand Treasury

This underscores the urgency of reforming pension systems and long-term care funding. Fiscal sustainability must go hand in hand with wellbeing, ensuring social cohesion across generations.

The road ahead: A new vision of ageing

The rise of the longevity economy presents both a challenge and a once-in-a-generation opportunity. By aligning data, innovation, and policy around a long-term vision of health and purpose, we can:

  • Extend lifespan while compressing years lived in poor health
  • Empower older adults as contributors, not dependents
  • Foster equity across generations

Success will require a holistic rethinking of ageing, not as a decline, but as an era of potential.