Longer lives and lower birth rates are changing demand for everything from health care to housing. Meeting the needs of an ageing population is a key challenge for businesses.
People are living longer, while in many countries fewer children are being born. As a result, needs - and markets - are changing. Older people have different housing priorities, and health care requirements increase over time. To survive and thrive, businesses must respond by adapting their products and services to these evolving demands.
The world’s population is both growing and ageing rapidly. By 2100, well over 25 % of the projected global population of 10.2 billion will be above 60 years of age. According to United Nations statistics, there are already more people aged 65 and over than children under the age of five. By 2050, the number of older people could be more than double that of pre-schoolers.
A caveat here is that these demographic changes depend on location. Populations are ageing faster in Europe and North America because of longer lifespans combined with rapidly falling birth rates. While many countries in Asia and Africa are also experiencing higher life expectancy, a significant number continue to have higher birth rates.
Demographic change has two faces. On the one hand, rising longevity means that more individuals are living longer in good health, thanks to better medical and preventive care, and greater prosperity.
Dr Tilman Dumrese is a Senior Equity Specialist at LGT, focusing on sustainability topics and the healthcare, consumer discretionary, and chemicals sectors. He holds a doctorate in immunology and worked internationally at renowned research institutes during and after his academic training in Germany and the US.
On the other hand, there are societal consequences of these longer lives. Combined with declining birth rates, we are seeing the rise of the "silver society". As the proportion of older people in the population grows, their needs are becoming increasingly important for business, investors - and politics.
US data shows how sharply health expenditure rises with age. For people aged 65 and over, personal health care expenditure in 2020 stood at USD 22,356 per capita - more than five times as high as for children and around 2.5 times as high as for adults of working age. Although the over 65s made up only 17 % of the US population in 2020, they accounted for 37 % of total health care expenditure.
The very elderly use even more healthcare. Those over 85 years of age have average health care expenditure of around USD 36,000 per capita. The growing number of very elderly people will ensure long-term demand for health care services.
Consequently, it is reasonable to assume that a larger proportion of economic output could be spent in future on pharmaceuticals, medical technology, and health care. In the USA, health care expenditure is expected to rise to more than 20 % of gross domestic product (GDP) by 2030. In countries like Switzerland and Japan, an even higher proportion of GDP will likely be spent on health care.
Against this backdrop, companies in the health care industry are developing new treatment options for conditions more common in older people, such as diabetes, cardiovascular disease, and cancer. Sales forecasts for selected branded drugs to combat heart and metabolic diseases are expected to grow by about 10 % a year between 2025 and 2030. Various sources predict growth of around 6 % for the pharmaceutical market as a whole.
The demographic shift could also support growth in medical technology. The global market was estimated at around USD 550 billion in 2025. By 2035, it could grow to around USD 850 billion, an average annual growth rate of around 4.5 %.
Suitable housing and support for older people is a focus of the property and social care markets, which are steadily growing. In Germany, the proportion of people in need of care rose from 2.5 % in 1999 to 6.7 % in 2023.
But this is not a homogeneous market. Investors considering this sector need to distinguish between the different business models. Residential aged care service providers offer comprehensive support and health care. By contrast, owners and operators of retirement housing provide accommodation for independent living, with additional services such as care in some cases. The economics of these businesses can be quite different; therefore the opportunities and risks also differ.
In the USA, the demand for housing for older people could well outstrip supply. Based on current construction activity and targeted occupancy rates, the sector may provide up to 70 % fewer new homes than are actually required. What could this mean for prices and profitability?
Growing demand alone does not guarantee investment returns.
The actual size of the shortfall remains to be seen. A key factor is demand. Many older people do not wish to move into care homes, preferring to remain independent.
So while opportunities exist in care services, housing, and assistive technology, the extent to which providers can benefit from these trends will depend on actual demand and how solutions are implemented.
Longer lives often mean longer retirements to finance. The IMF projects that the share of people over 60 will increase steadily worldwide, with fewer workers supporting more retirees. Private retirement provision is therefore becoming increasingly important, presenting challenges for individuals, pension funds and insurers. The insurance sector is showing strong growth in both corporate pension schemes and individual private retirement savings.
For example, private pension policies with a value of USD 460 billion are expected to be sold in the USA in 2026, an 8 % to 10 % rise from the previous year. In the UK, annual pension sales volume could rise from around GBP 8 billion in 2024 to GBP 20 billion in 2034.
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Finally, older people with time and money to spend are likely to drive growth in travel. With average annual growth of 4.1 % expected between 2026 and 2035, tourism operators are already responding to the demands of older travellers by providing more comfortable accommodation, health-related travel, and longer stays.
Medical tourism is an interesting growth area. In India alone, the market volume was estimated at USD 18 billion in 2025, with an annual growth rate of 12 %. Wellness tourism is also a focus, with a market volume of around USD 650 billion and annual growth of 7.3 %. Luxury and ultra-luxury cruises could also benefit from older, more affluent travellers.
Although the growth of the silver society is expected to place huge strains on public finances and unprepared economies, an ageing population could also create investment opportunities across several industries. For investors, the challenge is to identify businesses that can meet changing needs profitably. Market growth alone does not guarantee investment returns, and valuations may already reflect expectations of future growth.
