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When considering the economic impact of senior citizens, it all starts with “the longevity economy.” That is: People who live longer, work longer, and buy more over their lifespan. Longer lifespans are good for the economy.

The catch, of course, is that longer lives don’t necessarily mean healthier lives. Therefore, we can anticipate greater demand on the healthcare system in the future. But we might also expect innovations in the form of tools that help manage chronic conditions, medications that contend with common diseases, and other initiatives that help keep seniors healthier for longer. 

Here’s what investors should know about the connection between aging and the economy.

What Is the Senior Market?

Aging isn’t what it used to be. In 1920, the life expectancy in the US for men was 53 and for women, 54. Life expectancy in 2017, almost 100 years later, was 79.6. By 2060, life expectancy is expected to reach 85.6. By 2060, it is anticipated that there will be nearly 100 million Americans who are 65 or older.

What does that mean for the economy? It’s not all bad.  

For one, seniors are working longer than ever. Among people aged 65 to 69, the labor force participation rate has risen from roughly 28 percent in 1998 to 38 percent in 2019 for men and from about 18 percent in 1998 to 30 percent in 2019 for women. In part, that’s because the senior population is also more educated than ever before, with some senior members still driving the economy with new and innovative ideas. For example, people between ages 55 and 64 made up nearly 26 percent of new entrepreneurs in 2017, according to the Kauffman Foundation. In 2007, that figure was only 19 percent. 

Why Invest in the Senior Market?

Even if seniors live healthier for longer, the growth of an aging population will inevitably mean increased healthcare costs. But, as the aging population swells, it’s likely that innovation will replace some of healthcare as usual. Healthcare for the aging population is likely to be driven by the following trends, which investors should consider. 

Streamlined Preventative Care: Lots of Baby Boomers have various chronic conditions, which they manage via medication, doctor visits, and preventative health care. These include diabetes, obesity, and high-blood pressure, among other conditions. Aging and comorbidities can also lead to more detrimental (and expensive) diseases including Alzheimer’s, diabetes, cardiovascular diseases, and osteoporosis associated with falls, according to a report by the Global Coalition on Aging. These and other conditions, including loss of vision, hearing, bladder control, or skin health, negatively impact independence and result in additional costs. 

Effective preventative care can decrease the rate at which chronic conditions deteriorate and more expensive healthcare issues develop. As seniors age, we can expect improved preventative care to be a primary focus of most health systems. 

Remote Patient Monitoring (RPM) Devices: Remotely monitoring patients is proven to have a big impact on health outcomes, including significantly decreasing the number of readmissions and preventing medical emergencies. For seniors, these devices can also translate to increased independence. 

While telehealth is more widely accepted, especially since the pandemic, so too is connected health. Connected health devices track health metrics remotely and have the potential to help the healthcare system manage the growth of the senior population. As we emerge from the pandemic and look to the swell of the senior population, we can expect industry growth for the remote monitoring devices designed for older adults. 

RPM devices are particularly helpful for managing chronic disease and post-acute needs, as well as ensuring patient safety. Notably, when used by patients and caregivers, they significantly improve both self-management of care and communication with clinicians. 

Immunization Imperative: In the US, vaccination recommendations for the elderly include those for seasonal influenza, pneumococcal disease, and reactivation of varicella zoster virus (VZV). In many countries around the world, regular booster shots against tetanus, diphtheria, pertussis, polio are also recommended in the elderly. That’s all before the COVID vaccine, which infectious disease specialists are hoping to make it into the arms of the elderly worldwide (and could potentially be added as an additionally recommended annual vaccination).  

It is anticipated that, as the elderly population grows, the annual societal economic burden for the four vaccine-preventable diseases will increase from approximately $35 billion to $49 billion. That amounts to a cumulative cost of approximately $1.3 trillion and more than 1 million disease-related deaths, before COVID. 

As the number of seniors grows, so too will efforts to vaccinate them, which will be good business for the drug companies that manufacture vaccines. 

In-Home Care: More and more baby boomers are “aging in place,” or planning to stay in their homes rather than move to a senior living facility. And it’s working, particularly because of increased preventive care and better management of chronic conditions. Improved home care can benefit the elderly and reduce associated healthcare costs, according to the Global Coalition on Aging. 

Senior Living: Of course, not all seniors will be able to stay home even if they want to. Elders generally move into senior living facilities at age 83. In 2029, the oldest of the baby boomer generation will turn 83, at which point the senior living industry can anticipate an influx of demand. 

Senior living investments tend to be recession resilient, according to Haven Senior Investments. According to the National Council of Real Estate Investment Fiduciaries 2018 property index results, the total return for senior housing real estate on a ten-year basis was 10.52 percent. Senior housing outperformed the overall property index of 6.09 percent and apartment total returns of 6.10 percent.

Everyone ages, and the senior population is destined to grow. Senior care will require lots of money, which is an opportunity for the healthcare sector, particularly as healthcare innovations provide more personalized and efficient care.


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