As a nation’s population ages, more and more older people may draw from support systems such as Social Security, yet fewer workers may be around to pay into those systems. The problem is more dire than we think. The ratio of workers to retirees will drop precipitously in numerous countries worldwide this century, potentially sending nations into a financial tailspin.
A large, international study published in Sciencexpress in September received a lot of press for predicting that global population is likely to hit 11 billion by 2100, much more than the 9.6 billion high that had previously been predicted for this century. (Scientific American graphed the numbers in our December Graphic Science column.) But the very end of the study, which did not garner much attention, provided some shocking details about how the nature of that growth would skew the ratio of workers to retirees. The “potential support ratio”—the number of people aged 20-64 divided by the number of people aged 65 or over— in many countries will plummet.
The ratio, the report authors noted, “can be viewed very roughly as reflecting the number of workers per retiree." In the U.S. the ratio today is 4.6, and it is projected to decline to 1.9 by 2100—fewer than half as many workers to support a retiree as there are now. Germany’s ratio will drop from 2.9 to 1.4. Rapidly growing nations will see even greater collapses: China from 7.8 to 1.8, Brazil from 8.6 to 1.5, India from 10.9 to 2.3. African countries face similar fates: Nigeria’s incredibly high level of 15.8 will sink to 5.4.
The paper dryly concludes: “These results suggest some important policy implications.” Indeed. The authors do provide some encouraging advice for countries with currently high ratios of young people to old: “…they need to invest some of the benefits from their demographic dividends [their big, young workforces] in coming decades in provision for future seniors, such as social security, pension and senior health care funds.”
Graphs of the ratio decline in various countries are below, taken from the paper, which was written by Patrick Gerland at the United Nations, Adrian Raftery at the University of Washington and a host of international experts. The downward slopes, more like cliffs, are striking. The red line portrays the ratio from 1900 to 2100; the dark green area indicates the possible variation within 80 percent probability, the light green 95 percent probability.
All graphs from World Population Stabilization Unlikely This Century, Patrick Gerland et al. in Sciencexpress, Sept. 18, 2014.