In 2000 the average age in Singapore rose from 20 to 34 years. In 2050 it is estimated to be 52. Think. Just think for a minute. What does that mean? It will be a change for sure - quite a different change, in terms of culture, lifestyle, and society, not just in Singapore but also across the world and for the world in general!
Many developed countries today are already grappling with how to deal with their burgeoning elderly population. Singapore thankfully still has some years to plan. While the proportion of the elderly is increasing at alarming rates, East Asia as a region still fares better than Africa and Latin America, the two regions which will experience more rapid aging growth. Plus, while Singapore’s fertility rate is decreasing, unlike some other developed countries, Singapore’s population is still growing. The UN estimates suggest that Singapore’s population will not start to drop till around 2050. Japan and Germany, in contrast, are already seeing their population figures drop in addition to aging. It is projected that 75 percent of Japanese will be elderly dependents by 2050 and, if present fertility holds, the number of Germans will fall by 98% over the next two centuries. That’s almost to the point of extinction!
Lessons from Europe and more developed states show that comprehensive social welfare and pension systems are costly and unsustainable. This is true whether pension systems are defined benefits, defined contributions or something in the middle - no single system can cope with an aging population. In fact, a prospective contribution scheme, where the young pay for the old or any type of private investment account that depends on the economic activity of future generations in the work force, will not completely work if our population continues to age unless contributions increase or benefits are reduced. Plus, even if these unpopular reforms do pass, government budgets could still be burdened enough to impact economic growth to the point of even threatening government defaults, such as what we are seeing in Europe today. This could be possible even if benefits decrease and contributions increase.
Thus, in order to adequately manage the costs of an increasing aging population, the government cannot do it alone. Incentives and regulations need to be imposed to ensure that young people save enough to be able to finance their own and their families’ retirement - even if they may not value it now.
Promoting individual savings from an early age is key. The increased focus on making Singapore a private banking hub will help people have better access to financial advisors, and information on how to plan for retirement and manage their wealth. The increase of retirement age, CPF top-ups, funding for the Medifund endowment and for elderly care, and the passage of the retirement and reemployment act will help ensure that the elderly will either be self-sufficient or that someone in their family will be able to care for them with some government support.
Other entities besides the government and individual savings need to be developed. While initial government subsidies have been utilized to cultivate viable voluntary welfare organizations (VWOs) that provide long-term care, there should be less dependence on government funding for these organizations into the future. To encourage alternative sources of funding for VWOs/NGOs/social enterprises that cater to helping or caring for the elderly, there should be more incentives for high-net-worth individuals to opt to start family offices, for philanthropists to start or set up base here, and for corporations to institute corporate social responsibility programs/impact investment funds/indexes. The goal is public investment to spur private sector investment and growth.
Also, a lot more attention and research needs to be done on the elderly to better understand what makes them happy, how they currently live their lives, what is/is not important to them, and how they currently come into contact with different features of the system. This will help in ensuring that resources go into the right areas and that we are able to cater to the elderly’s needs (whether it is housing, health care, emotional connections, etc). Keep in mind that our generation will be a very different elderly population from that which exists today. We will be living longer, we will be more educated, we will be hopefully financially independent, and, with new health innovations, we will age healthily with far less disability. So we also need more research on what this will mean about caring for us and what these differences mean for our generation and our future generations over the past generation and into the future.
From Europe, we can start our own debates on the costs and benefits of economic growth and productivity. We can debate whether, for example, as a society, we want our people to work till old age. There is no reason why Spain or France cannot be as productive as us. They too can institute laws to make people work longer hours for a longer number of years. They choose not to. Do we want our elders or ourselves to take it easy and enjoy old age or spend our time working? Do we want to go away to nursing homes and spend less time with our family, be close and live with them, or have our families move with us to multi-generational villages like some families have done in Japan. What do we value more? How many options should there be? What role should the government have in deciding resource allocation, availability, and provision? Is there a way we can benefit from and get value from our elderly so they do not have to be purely seen as a burden and cost?
Our population and the world’s population, in general, are aging. The trend seems to be, at least for some countries, one not only of population decline but also of possible extinction in the centuries to come. There are lessons to be learned from us as well as others on tradeoffs; lessons we may not like completely; lessons that, for now at least, I will only introduce as questions:
- Why as we have become more affluent and more advanced with many more opportunities available to us, are we choosing to have fewer children?
- Are we loosing our love of life, our connection to the past, is it lack of confidence of the future or of our leaders, or is it something else?
- What can we say of trends such as increased urbanization, education, literacy, modernization, and secularization, trends that are all associated with fertility declines and of increased economic growth?
- Has our new culture/lifestyle caused children to be viewed as more of a cost than as an additional source of value or income?
- Why do we choose to pursue our own career/ self-interests at the expense of cultural extinction?
For whatever reason, in general, in the world, just as in Singapore, and apart from a few countries, we tend to be aging. The more and faster we age, the more and faster our populations will be in eventual decline - some countries more so now than in the future - for some countries, it is not even in the horizon. There are some who might say there are too many people in the world today. This may be so but if we continue to have less children and live longer, we will get older. We will also get smaller because while we will live longer eventually we will die so decreased fertility will have to over-take life expectancy at some point in time. Singapore won’t be experiencing this for the next few decades. Nevertheless, increasing fertility rates is key to survival. Immigration can only do so much. Will we be able to increase our fertility rates in time? This will not only address our aging issue but more importantly whether or not our culture and society will even exist in the centuries to come.
Read also Melinda's earlier article on the same issue: One of the fastest rising silver nations yet.
About the Author:
Melinda Elias is a recent graduate of the School of International and Public Affairs (SIPA) of Columbia University. Her interests intersect the areas of health, international affairs, finance, policy, and economics. She is currently also interested in documenting life stories of Singaporeans over the age of 70. To find out more about the latter please click here.