The average age of the global population is rapidly increasing; this is a result of increasing life expectancy, declining birth rates and the post World War II ‘Baby Boomer’ generation coming to retirement age. Over 60s will account for 22% of the global population by 2050, equating to roughly 2bn people, outnumbering children.
This social phenomenon has led to a number of opportunities and threats associated with old age, which will have a far reaching impact on our economy and will affect more than just the healthcare industry. All industries will have to adapt and appeal to older generations if they are to benefit from this structural demographic change.
What is causing population ageing?
1. Increasing life expectancy
Global life expectancy has increased by 20 years from 48 years old in 1950-55 to 68 years old in 2005-10. This is expected to reach 75 by 2050.
2. Falling birth rates
The fertility decline over the last half century has been one of the main factors explaining global ageing (Source: UN). Global birth rates have fallen from 5 children per woman in 1950, to 2.5 today, and are expected to fall to between1.8-2.2 by 2050.
Global birth rates vs. replacement rate of 2.1 children per woman
Source: Bank of America Merrill Lynch, Data World Bank
3. Boomer bulge
‘Baby boomers’ are commonly defined as people born after World War II, during the years 1946 and 1964. There are roughly 450m born in the spike period, who are now reaching retirement age and are creating a bulge in the age pyramid.
Source: Neilson & BoomerAgers
What impact will this have on our economy?
Currently, just over one in ten people are aged over 60, but they account for a much larger proportion of the economic power. For example, the Baby Boomer generation reportedly accounts for c.60% of US consumer spending and c.50% of UK spending (Source: AARP, Saga). In absolute terms the numbers are also big. The spending power of consumers aged over 60 is estimated to be $15tn globally by 2020 (Source: BAML, Euromonitor).
The increasingly older population will have a profound impact on the economy as it controls a larger proportion of wealth and spending power.
We conducted a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of old age, which helped us to highlight some of the industries which are developing relevant products and solutions for an ageing population, which you can see below. We have also taken a closer look at the financial services industry.
*some are wealthy but this is not universal
|New experiences||Technology||Disposable income||Loneliness||Duration Gap||Failing health|
|Travel companies||Social networking||Cosmetics||Senior living||Insurance||Senior living|
Machine to machine technologies
|Retail||Travel companies||Wealth managers||Medical devices|
|Social networking||Automation & Robots|
Longevity presents the risk that people live longer than expected and have not accumulated enough savings for their life (duration gap). This creates opportunities for insurers and wealth managers that are able to manage assets during the accumulation phase and manage risk during the post-retirement ‘decumulation’ phase.
Wealth of the older generation
– In the US, the 50+ population controls 80% of aggregate net wealth with an average wealth of $765,000 (source Oxford Economics)
– In the UK, 50+ households are worth £541,000, and this peaks at £723,000 at age 60-64
Old people tend to have a large amount of investable assets, but only 40% of retirees use a financial adviser. In the US there are roughly 1.9m households with investable assets over $2m, and 56% of those households are headed by someone over 60 years old. Globally, total wealth stands at $240trn with $46trn of this being readily investable.
The ‘Great Transfer’
The additional factor to consider when discussing the opportunity of ageing populations and wealth management is the asset transfer from people born in the 1920s and 1930s to the Boomers. This ‘Great Transfer’ estimates a shift of $12trn of wealth, and this will happen over the next c.30 years as the Boomers die and pass their wealth onto the next generation.
US Investable Assets Transferred by Year
Source: Accenture based on Cerulli Associates
The financial services industry will be very important in a future where state support is diminishing and pension savings are now the responsibility of the individual. Evidence suggests that people are unprepared for their financial futures, with only 6% of households using estate planning services (Source: BAML and Accenture).
We have highlighted a number of companies that should benefit from this structural theme, including global insurer Prudential, which has emerging market exposure, an excellent management team and a number of thriving subsidiaries. Wealth managers, including St James Place based in the UK and AMP Ltd in Australia, are also well placed to benefit from helping people prepare for their financial future.
Examples of stocks are provided for general information only to demonstrate our investment philosophy. It is not a recommendation to buy or sell. Note that the view of the Manager may have changed since this article was written.
Bank of America Merrill Lynch – The Silver Dollar
Sarbjit Nahal, Beijia Ma.
Photo: Francisco Osorio via Flickr
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How Going Green Can Save A Company Money
What is going green?
Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.
The first step in going green
There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.
Making needed changes within the company
After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.
Reducing the common paper waste
Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.
Make money by spreading the word
Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.
5 Easy Things You Can Do to Make Your Home More Sustainable
Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.
1. Weather stripping
If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.
Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.
Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.
2. Programmable thermostats
Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.
Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!
3. Low-flow water hardware
With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.
Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.
Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.
4. Energy efficient light bulbs
An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.
New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.
5. Installing solar panels
Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.
Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.
From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!
These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.
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