Death and Taxes: Can We Afford to Get Older?

Death and taxes were once stated as the only two certainties in this life, and ageing is part of the former for all of us.  The problem is that society is changing and age no longer carries the perceived prestige of wisdom or the certainty that community will step in to support.  As such, the question haunting policymakers, economists, and people across the developed world is increasingly urgent: can we afford to get older? As Western societies grapple with unprecedented demographic shifts, the traditional assumptions about retirement, healthcare, and the social contract between generations are crumbling under the weight of mathematical reality and the changing shape of the pyramid of the young supporting the old.

The Perfect Storm of Demographic Change

We are witnessing a convergence of trends that together form what demographers call the "silver tsunami." Birth rates across the OECD have plummeted below replacement levels, currently averaging 1.6 children per woman, well below the 2.1 needed for population stability. Meanwhile, life expectancy continues to rise, creating an inverted population pyramid where fewer young workers must support growing numbers of retirees.

In Japan, already a decade ahead of this curve, adult diapers now outsell baby diapers. Italy faces the prospect of its population halving by 2100. Even in the United States, the ratio of workers to retirees is projected to fall from 3.3 today to just 2.3 by 2050.  It seems the pyramid is beginning to rotate.

This demographic time bomb creates a fundamental economic challenge: how do you maintain living standards when your productive workforce shrinks while your dependent population explodes?

The Pensions Crisis: Promises We Cannot Keep

The most visible manifestation of this crisis lies in our pension systems, which were designed for a world that has changed enormously. When Otto von Bismarck introduced the first state pension in Germany in 1889, the retirement age was set at 70—higher than most people's life expectancy at the time, so you effectively worked until you died. Today's pension systems, built on the assumption of steady population growth and relatively short retirements, face an existential crisis.

Public pension systems across the West are mathematically unsustainable Ponzi schemes. The U.S. Social Security trust fund is projected to be depleted by 2034, at which point benefits would be cut by approximately 20%. The UK's state pension faces similar pressures, with the triple lock mechanism promising annual increases that outpace economic growth becoming increasingly unaffordable.   And in the UK there is no fund, simply put, the taxes on the working pay for the retirement benefits of the old.

Private pension provision offers little comfort. Defined benefit schemes have largely disappeared, replaced by defined contribution plans that shift financial risk to individuals. Yet most workers have saved woefully inadequately. In the United States, the median retirement account balance for workers aged 55-64 is just $120,000 which is enough to provide perhaps $500 per month in retirement income.  Whilst some governments have made moves to drive pensions contributions, the reality is that most of us invest too little when we are young, a position exacerbated by recent cost of living increases.

Healthcare: The Exponential Expense

If pensions represent a significant personal income challenge, healthcare costs present an exponential cost challenge. Medical expenses naturally concentrate in the final years of life, precisely when the ageing population will be largest. The development of increasingly sophisticated and expensive medical technologies and drugs creates a cruel paradox: we can do more to extend life and improve its quality, but at costs that may bankrupt the very societies that developed these innovations.

Consider the new generation of weight-loss drugs like Ozempic and Wegovy, which show remarkable promise for treating obesity and its related conditions. At current prices of $800-1,000 per month, providing these medications to the 40% of American adults who are obese would cost more than the entire federal defence budget. Similar dilemmas arise with breakthrough cancer treatments, gene therapies, and other medical advances that can extend life but at extraordinary cost.

The mathematics are sobering. In most developed countries, healthcare spending already consumes 9-11% of GDP. With aging populations and advancing medical technology, some projections suggest this could reach 20-25% by mid-century, a level that would crowd out virtually all other government spending.

Compounding these direct medical costs is the crisis in social care. In the UK, the lack of adequate social care services forces many elderly people into expensive hospital stays when they could be safely and more comfortably managed at home with appropriate support. This creates a cascade of costs: hospital beds occupied by people who don't need acute medical care, families forced to sell homes to pay for care facilities, and a generation of older adults isolated from their communities and social networks.

The social isolation epidemic carries its own economic burden. Loneliness among the elderly creates health impacts equivalent to smoking fifteen cigarettes a day, increasing risks of dementia, depression, and premature death, all of which translate into higher healthcare costs.

This is where AI-powered solutions offer perhaps their greatest promise. Robot helpers and AI companions could potentially enable people to remain in their homes far longer, preserving both their independence and their housing wealth while reducing the burden on healthcare systems. These systems can provide 24/7 monitoring, medication reminders, fall detection, and even companionship, functions that currently require expensive human caregivers or institutional care.

Japan, facing the most severe ageing crisis, is already deploying robot companions in nursing homes and private residences. From interactive robots that lead exercise sessions to therapeutic robotic pets that provide comfort to dementia patients, the technology recalls the benevolent AI helpers of science fiction, the caring robot Baymax in "Big Hero 6" or the supportive AI companions in films like "Robot & Frank."  This future may not be too far from now.

Early applications are already emerging in Western countries. Amazon's Alexa is increasingly used by the elderly for medication reminders and emergency assistance, while more sophisticated AI companions like ElliQ provide proactive conversation, health monitoring, and family connections. These systems can detect changes in speech patterns or daily routines that might indicate health issues, potentially catching problems before they require expensive medical intervention.

Critics worry about the dystopian implications of elderly people's primary companions being machines, echoing cautionary tales from films like "Blade Runner 2049." Yet for someone facing the choice between AI companionship and crushing isolation in an underfunded care system, the calculation becomes more complex. The economic benefits are equally compelling: keeping people in their homes with AI assistance could save the system billions while preserving individuals' wealth and dignity.  A personal request: can my future helper/AI friend please talk to me like Scarlett Johansson in “Her”……..

Redefining a Good Death

Amid these stark economic realities, we must also grapple with fundamental questions about the nature and quality of life's final chapter. Atul Gawande's influential book "Being Mortal" challenged us to think beyond mere longevity to consider what constitutes a meaningful and dignified end of life.

The medicalisation of death has created situations where expensive interventions extend life without necessarily improving its quality. The average Medicare beneficiary spends one-third of their lifetime healthcare costs in their final year of life, often on treatments that provide minimal benefit while causing significant suffering.

This reality has sparked renewed interest in assisted dying and end-of-life choices. Countries like the Netherlands, Belgium, and Switzerland have developed frameworks allowing individuals to choose the timing and manner of their death under specific circumstances. Several U.S. states now permit medical assistance in dying for terminally ill patients and the UK has passed a landmark assisted dying bill.

The economics are impossible to ignore: extending life at any cost creates unsustainable financial burdens, while providing individuals with greater autonomy over their final chapter could reduce both suffering and expense. Yet these conversations remain difficult, touching as they do on fundamental questions of human dignity, religious belief, and the role and morality/duty of medical professionals.

Pathways Forward: Emerging Solutions

Despite these daunting challenges, several potential responses offer hope, though each requires difficult trade-offs and fundamental shifts in expectations.

Extending Working Lives: The most obvious solution involves aligning retirement ages with life expectancy. If people are living longer, healthier lives, working until 70 or even 75 becomes more feasible. This approach could dramatically improve the worker-to-retiree ratio while allowing individuals more time to accumulate retirement savings and gives them a social connection with fellow workers. However, this is not going to be politically palatable if it come with later retirement benefits: witness the protests in France for example as the state retirement age has been extended.

Immigration and Integration: Targeted immigration policies could help offset demographic decline, though this requires successful integration and faces significant political resistance. Countries like Canada and Australia have demonstrated that skilled immigration programs can help maintain favourable demographic profiles.

Technological Revolution: Artificial intelligence and automation may eventually break the direct link between the number of workers and economic productivity. If machines can increasingly perform human labour, smaller workforces might still generate sufficient wealth to support larger non-working populations.  Albeit, see my earlier article, “The AI Revolution Will be Televised” for some of the downsides of this future.

Intergenerational Wealth Transfer: The coming decades will see the largest intergenerational wealth transfer in history as Boomers pass their assets to their children. While this won't solve systemic funding issues, it may provide some families with resources to manage their own aging costs, assuming they are not eaten up by Boomer care costs.

Healthcare Innovation: Preventive medicine and early intervention could potentially reduce the concentrated costs of end-of-life care (tackle the causes of later life ill health not the symptoms). Investments in healthy aging might yield significant returns by compressing morbidity, keeping people healthier for longer periods before rapid decline.  This is the holy grail of health policy but so far has proved difficult to implement.

New Social Contracts: Perhaps most importantly, we may need to develop new models of social organisation that don't rely on traditional employment-based systems. Universal basic income, alternative ownership structures, and new forms of community support could help navigate a world where traditional work patterns no longer exist.

The Choice Ahead

The question "can we afford to get older?" has no simple answer. The current trajectory, maintaining existing systems while populations age and costs escalate, is clearly unsustainable. Yet the alternatives require difficult conversations about work, retirement, healthcare rationing, and the nature of a life well-lived.

What seems certain is that the social contract that defined the post-war era, work until 65, then enjoy a comfortable retirement funded by younger generations, is coming to an end. The societies that acknowledge this reality earliest and begin adapting their systems accordingly will be best positioned to navigate the demographic transition ahead.

The aging crisis is not an abstract future problem but a present reality requiring immediate attention. The choices we make in the next decade will determine whether growing older becomes a privilege or a burden, both for individuals and for the societies that support them. The question is not whether we can afford to get older, but whether we can afford not to fundamentally reimagine how we structure our societies around the reality of longer lives and changing demographics.

In the end, perhaps the most important insight from this crisis is that aging well requires more than just living longer, it requires creating systems and making choices that preserve dignity, meaning, and sustainability across all stages of life. The challenge is enormous, but so too is the opportunity to build something better than what we're leaving behind.