Population aging is a major demographic trend and indications show that it will continue to grow during the decades to come. This means that it will be increasingly important to anticipate these changes and plan for population aging at different levels of society.
The global average life expectancy for a child born today is 77.5 years for a boy and 81 years for a girl. According to the World Health Organization, average life expectancy increased 5.5 years between 2000 and 2016, the fastest increase since the 1960s. Over the coming years, life expectancy is expected to continue to increase. This factor in combination with demographic trends in Europe, the Americas, and Asia, is creating a large Silver Economy for the baby boomer generation.
The population pyramid in Europe is drastically being reshaped. In 2018, 101.1 million EU citizens were over 65, nearly 20% of the total population. Europe’s population is aging and by 2050, older adults will represent 28.5% of our population. By 2070, 30% of Europe’s population will be aged 65 and over, which is 10% more than today. By 2100, this is projected to be 31% and the share of people over the age of 80 is expected to more than double. Greece is no exception to this; 20.4% of its population are above 65 and currently has a birth rate of 1.2 which is expected to reach 0.7 in the near future.
Europe is considered well placed to benefit from the emergence of new market opportunities that population aging might bring. This is because not only does Europe have one of the fastest-aging populations in the world; there is also large interest from the private sector in many countries. Here, private funds can be used effectively to foster new markets and enhance growth potential.
By 2030, the total annual spending power (in 2011 PPP $) of people aged 60 and over in Europe is expected to increase 39% to over $5 trillion while the number of people in this age bracket is expected to increase 18% to 221 million. Germany currently has the largest share of 60+ European spending power representing 16.5% of the total. This will continue to be the case in 2030 as the spending power of German seniors is expected to grow 41% from $617 billion to $870 billion. Per capita, the seniors of Luxembourg currently have the highest spending power ($38,907) and this is expected to increase 12% to $43,584 over the next decade. Out of the 40 countries in our European analysis, only 3 countries (Finland, Norway, and Italy) are expected to experience a growth of per capita spending power of less than 10%.
Currently, the 60+ cohort represents 28% of Europe’s $13 trillion total spending power. By 2030, this will increase to a third of Europe’s $16 trillion spending power. While much of this is the result of demographic change, our projections indicate that the growth in spending power is outpacing the headcount growth of this cohort. Companies and organizations with operations in Europe would do well to address the needs of the growing Silver Economy, a group that is expected in both the short and long term to hold a significant portion of the continent’s consumption power.
In response to the trend of population aging, promoting activity and health in older age is increasingly seen as vital for enabling older people to participate more actively in society, while also having a positive impact on well-being. There is also strong belief in the potential of technologies and social innovations and cross-cutting solutions for improving the health and well-being of older people. Three closely related concepts promoted are active aging, healthy aging and age-friendliness.
Active aging is the process of optimizing opportunities for health, participation, and security in order to enhance the quality of life as people age. ‘Active’ refers to continued participation in social, economic, cultural, spiritual, and civic affairs. Similarly, healthy aging refers to the process of developing and maintaining the functional ability that enables well-being in older age. Similarly, the concept of age-friendliness is used particularly in the context of age-friendly communities, which can be defined as places that foster active and healthy aging. It could also be planning services infrastructures and activities so that they enable social, civic, and economic participation and well-being throughout life. Unfortunately, a high percentage of older adults are living in areas with no facilities to accommodate them properly, and face difficulties due to the lack of goods and services adapted to their needs.
Another challenge is that there is a growing proportion of people who are approaching the final years of their lives, when health impairments and health-care needs increase, while there simultaneously is a decreasing share of people in younger age groups who could provide such care and support. However, population aging may also provide various opportunities owing to its untapped potential.
Real estate may be of great importance to the Silver Economy. Properties and facilities that meet specific needs and create a safe environment should allow people to continue offering their skills and experience within the community. These facilities may be available of accepting several ages.
Greece can significantly benefit from this. Having attractive geographical characteristics and the culture of accepting and appreciating the elderly, it can create the right environment for such investments to take place. Developing more age-friendly facilities and appreciating and activating the aspirations of senior citizens is central to developing the Silver Economy market. Senior housing industry (retirement homes, assisted living) can provide substantial infrastructure to the country and attract Silver Economy nomads. It is well known that year by year the number of seniors that are looking to buy a second home in Greece is increasing. However, most elderly people that are looking to buy independent residences are ignoring the fact that, at any given time, they might need medical or other kinds of assistance.
Also, other real estate developments capable of promoting healthy and active aging can add value to this social development. Specialized facilities which may prevent or delay care dependency, will also indirectly, through enhanced health and functional ability, contribute to this. This is also one of Greece’s strong points thanks to highly skilled medical and supporting staff.
On top of the well-known geographical, climate, and human resources advantages, Greece has to offer financial and tax incentives to those who might decide to move to the country, including the golden visa program and flat tax. Under current legislation, qualifying retirees would pay a flat tax of 7% provided they move their tax base to Greece and meet certain conditions. The incentives do not apply to Greeks or other nationals who were tax residents in Greece in the last few years. And the incentives will only extend to retirees from countries that have an existing tax treaty with Greece.
The Silver Economy has emerged as a response to population aging in Europe in recent years. Older people continue to make valuable economic and societal contributions after retirement, and these citizens can provide significant economic and societal benefits, particularly if they are healthy and active. There is a need to design and implement initiatives to promote the Silver Economy and the closely related concepts of healthy aging, active aging, and age-friendliness. Real estate facilities together with specialized services will play a primary role in creating the right environment for implementing the Silver Economy’s core values and realizing its potential.
Left Sikalidis, MRICS is Founder & CEO, Sikalidis.com and President of the Real Estate & Development Committee, American-Hellenic Chamber of Commerce