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Special – Baby, it’s over: The last boomer turns 50

With the last of the baby boomers turning 50 at the end of 2014, this generation is set to reshape retirement

Richard Wolf & Greg Langley

Special – Baby, it’s over: The last boomer turns 50

With the last of the baby boomers turning 50 at the end of 2014, this generation is set to reshape retirement

Richard Wolf & Greg Langley

Baby boomer retirement at a glance:

  • The size of the boomer generation represents the most pronounced retirement income challenge in history.
  • Analysis shows New Zealand was the baby boom champion, undergoing a baby dividend lasting 27 years; in contrast, Italy’s lasted four years. On average, the boom lasted 16 years.
  • All countries will suffer deteriorating demographics during boomer retirement. Austria, Belgium, Germany and the Netherlands will have the highest old-age dependency ratios (the number of those 65+ to those of working age).
  • Europe’s aging problem is rooted in the baby bust. Low fertility has resulted in following generations that do not even match the pre-baby boom generations in numbers. Some countries are already super-aged before their baby boomers even enter retirement. (See page 11 for definition of super-aged)
  • As Europe’s aging problem is rooted in the baby bust, and the one in Anglo-Saxon countries in the baby boom, both will see old-age social security costs rise.
  • On average, as baby boomers enter retirement, pension expenditure will increase by 29%. Australia will see pension expenditure as a share of GDP jump by 20%; in Canada, Switzerland, the Netherlands and the US will increase by a third. In New Zealand, pension costs will soar by 64%. “Old countries” will not see such dramatic increases as they are already at high levels of public expenditure.
  • Population aging in continental Europe is mainly driven by the “baby bust” and it will be the first time in modern history that working-age populations will actually shrink. Germany will see a decline of 14% in the working-age population between 2021 and 2033. Other countries where shrinking working-age populations will be visible include Austria and Belgium.
  • Anglo-Saxon countries have shown the baby bust can be alleviated through replacement rate fertility and migration. Nordic countries and France are following, showing that surprising trend reversals in fertility are possible.

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