Many countries face the reality of demographic aging: Fertility is plummeting and people are living longer. This raises critical challenges for the labor market, healthcare, and long-term care markets, as well as retirement systems and financial planning. A Wharton symposium on the implications of this change, “The Future of Healthy Aging and Successful Retirement,” was held in May 2025 at the Wharton School, co-hosted by Olivia S. Mitchell, Wharton professor of business economics and public policy and executive director of the Pension Research Council; Wharton finance professor Nikolai Roussanov; and Surya Kolluri, director of the TIAA Institute.

Sponsored by the Pension Research Council, the two-day event featured more than 30 global experts who shared their insights on how to prepare for and address the challenge of global aging.

The forecast

According to Amal Abou Rafeh, chief of the U.N. Program on Ageing, the United Nations forecasts that by 2050 the global number of persons over age 65 will reach 1.6 billion, double the number in 2021. Moreover, she noted that almost half a billion people will be 80 years or older, almost triple the number in 2021. In contrast, the number of people below age 25 is likely to decline slightly during that period.

Key to planning for healthy aging and successful retirement is accurately understanding one’s likely longevity, a point highlighted by David McCarthy, University of Georgia professor of risk management and insurance. His research examines two scenarios for aging patterns in industrialized countries. In one, mortality at older ages is “compressed,” meaning that more people reach older ages, but mortality at those ages remains unchanged. In the second scenario, mortality is “postponed,” allowing more people to live very long, but mortality rates also decline at these ages. His research finds significant evidence of the postponement hypothesis, but compression is also important when forecasting mortality improvements.

Rising longevity in old age also has key implications for retirement savings targets. McCarthy’s calculations show that a man retiring at 62 in 1959 would have needed assets worth 6.4 times his annual spending to be 50% certain that he would not outlive his assets, and assets totaling 13.8 times his annual spending to be 95% certain that he had sufficient assets to sustain old-age consumption. A woman retiring in 1959 would have needed assets amounting to 9.2 times her annual spending to be 50% certain, and 14.94 times her consumption to be 95% certain.

In 2019 (the latest date for which these calculations are available), the man would need to have saved 10.5 (15.7) times his annual spending to be 50% (95%) certain, whereas the woman would have to have saved 12.1 (16.4) times her annual spending to be 50% (95%) certain.

‘If workers become healthier, this will likely also boost productivity.’
—Olivia S. MitchellLengthening lifespans may imply global labor-market shortages, as well as burgeoning costs for healthcare, pensions, and eldercare, with the burden falling on ever-fewer workers per retiree. Some also warn of potential declines in GDP growth, consumer spending, and long-run productivity unless mitigated by education and technological changes.

 Moving from lifespans to ‘healthspans’

Several options are possible if countries are to reverse the potential negative aspects of aging on the global marketplace. Stephen P. Utkus, a member of the Pension Research Council advisory board, and Wharton’s Mitchell proposed that the focus must shift from “living longer” to “living better.” That is, the challenge is to find new ways to maximize our “healthspan,” or the number of years we live unencumbered by the chronic diseases of old age.

In their overview of options and opportunities, the analysts highlighted the emerging field of geroscience, which focuses on the fundamental cellular processes to discover ways to extend longevity and healthspans. Venture capital investors have also been drawn to the “longevity marketplace,” which differs from the “wellness market” in that it addresses cellular dysfunctions rather than specific diseases, and uses longevity diagnostics and longevity clinics.

Mitchell noted that U.S. employers may have little interest in promoting healthier aging because much of elder healthcare is financed through the government rather than by firms. Yet, she added, “If workers become healthier, this will likely also boost productivity.” Utkus and Mitchell also suggested that employers could promote healthier eating with appropriate labeling, and policymakers can employ sin taxes (on consumption of sugar and ultraprocessed foods). Schools and communities could also create programs focused on smarter food consumption, increased exercise and sleep, and stress reduction, among other factors that contribute to health conditions.

Cognitive declines in later life pose challenges

Cognitive decline can have profound adverse effects on an older person’s ability to weather health and financial shocks, adhere to medical instructions, and carry out activities protective of retirement well-being, according to Norma Coe, professor of medical ethics and health policy at Penn’s Perelman School of Medicine. With Perelman colleague Lindsay White and Patrick C. Arp from Ohio State University, her work underscores that cognitive impairment in later life is a leading cause of disability and mortality.

Accordingly, key priorities are to identify risk factors and develop strategies to maintain high cognition levels associated with population aging. This can be achieved through cognitive stimulation, including social activities that help elders stay physically and mentally active. Coe noted that if people use their brains a lot, they “can stay strong and healthy.” However, failing to do so can lead to atrophy.

‘We need to design a new map of life.’
—Laura L. Carstensen

This is particularly relevant in the U.S., as older Americans have experienced the largest decline in wealth due to cognitive decline, according to Samer Atshan, Marco Angrisani, and Jinkook Lee from the University of Southern California. The team attributed this fact to the U.S. retirement system, where individuals must self-manage their wealth and make complex decisions about how to spend retirement assets. By contrast, retirees fare better in many European countries, thanks to supportive social structures, including universal healthcare, social protections for disability, and stronger family support networks. One implication of this result is that strengthening financial protections for older Americans with cognitive decline could greatly enhance their retirement well-being.

A companion way to mitigate the financial stress brought on by longer lifespans could be to ensure that people put a portion of their retirement savings into default annuities, according to Vanya Horneff and Raimond Maurer of Goethe University Frankfurt, and Wharton’s Mitchell. This team argued that default annuities can be a valuable solution for many, since in this setting, a portion of people’s retirement savings is automatically converted into lifetime income. Annuities are an insurance product that also offers attractive returns to those who live long: They give retirees access to the “survival credit,” or the extra return payable to survivors from the pooled assets of early decedents. Based on their research, the analysts proposed that defaulting 20% of people’s retirement assets (over a threshold) into immediate annuities enhances retirement security for most plan participants.

Resetting the longevity imperative

While science has succeeded in slowing the dying process, it must now focus on slowing the aging process, according to the London Business School’s Andrew J. Scott, professor of economics. In particular, he argued that the “longevity imperative” will require us to invest in the future and see the aging economy positively, rather than negatively. He noted that the conventional construct of a three-stage life—“education, work, retirement”—needs to be overturned, because this makes little sense when people live to age 90 or 100. For instance, he suggested that national retirement ages should be set not contingent on life expectancy, but rather on healthy life expectancy.

Moreover, he urged policymakers, firms, communities, and households to think of new ways to create age-friendly jobs and industries that allow seniors to continue using their skills and talents. He added that better healthcare systems must focus on health and prevention, rather than treatment. Such a model, he argued, will result in a “three-dimensional longevity dividend,” or a long, healthier life—a life that is more productive—and a life where people remain engaged as they age.

‘As we learn about the long-term impacts of our poor health behaviors for our future selves, we will be more likely to take steps to do the right thing.’
—Olivia S. MitchellLaura L. Carstensen, Stanford professor of psychology, also supports a rethink of the conventional three-stage model of life. In her discussion, she noted that the traditional pyramid-shaped view of age distributions, with more young people (at the bottom) than older people (at the top), are now becoming rectangles, with the same number of 5-year-olds and 65-year-olds. This changing demographic process will also result in five generations being alive at the same time, and multiple birth cohorts participating simultaneously in the workforce.

This will mean, among other things, that the traditional model of caregiving, where younger family members take care of older ones, will become simply untenable. Additionally, she noted, “We need to design a new map of life.” People will need to return to school in later life to acquire new skills, and firms will need to make jobs more age-friendly. Moreover, the financial sector will need to make products more transparent so people can save more when young and stretch their assets to last longer in retirement.

What will new technology imply?

Older people will also benefit from workplace changes that artificial intelligence (AI) is already bringing. Carlo Pizzinelli and Marina Mendes Tavares from the International Monetary Fund analyzed which occupations will be “high exposure and high complementarity” with AI (e.g., judges and lawyers); “high-exposure and low-complementarity” (e.g., economists and legal assistants), and “low exposure” (e.g., dancers, dishwashers, truck drivers, and surgeons). They concluded that helping workers transition smoothly to the AI era will require a wide range of stakeholders, including schools, employers, and governments, to provide employees with the necessary training, opportunities for lifelong learning, and extensive safety nets in case the transition proves difficult.

New technologies, such as AI, will also shape a multitude of decisions people make regarding their nonwork behaviors, including smoking, drinking, eating, exercising, and sleeping. “As we learn about the long-term impacts of our poor health behaviors for our future selves,” noted Mitchell, “we will be more likely to take steps to do the right thing.” AI will also enable individuals to receive personalized advice for career and retirement planning. For instance, avatars could help us visualize our future selves; plan alternative career paths; simulate different saving, work, and investment paths; and integrate health and financial solutions into our retirement plans.

Will there be a silver dividend?

Countries that are able to successfully harness the “silver dividend” of aging are likely to reap productivity boosts from a population that can work longer, said macroeconomists Kwanho Shin and Donghyun Park of the Asian Development Bank. The silver dividend concept refers to the economic benefits that can arise in aging societies if policies are implemented to boost labor efficiency.

The empirical analysis supporting this conclusion relies on a large, cross-national dataset of demographically diverse countries. Their analysis confirms that population aging tends to have a negative effect, not because of labor force shrinkage but because it tends to drag down growth in total factor productivity (TFP). This TFP metric indicates how efficiently labor and capital inputs are deployed to produce output. Their evidence challenges the conventional wisdom that population aging inevitably leads to labor shortages, which in turn constrain an economy’s productive capacity.

Instead, they find that countries facing aging populations, such as China, Japan, Germany, South Korea, and the U.S. tech sector, have prioritized policies that boost TFP, ensuring long-term economic resilience. When younger workers are scarce, firms drive automation and innovation to achieve efficient gains, using robotics, digital transformation, education, and skill development. Shin and Park concluded that long lives, high levels of human capital that raise the opportunity cost of early retirement, and greater trade openness can lead to more productive economies in the face of population aging.

Published June 17, 2025, by Knowledge at Wharton.