Silver Economy: The Industries Benefiting from the Ageing Population

The Australian population is continuing to age, driven by a declining birth rate and an improving average life expectancy. The median age of the Australian population has increased from 29.4 years in 1980, to 37.7 years in 2020-21. The number of Australians aged 70 and older has risen by 239.0% over this period, to over three million in 2020-21. In 1980, there were 15.6 Australians aged under 70 for every Australian aged over 70. In 2020-21, this ratio has fallen to only 7.6 Australians per senior citizen. The number of Australians aged over 65 is expected to double by 2057.

As a fast-growing demographic, the rising number of older Australians are impacting a number of specialised industries. Rising demand is supporting the industries that can meet the financial, medical and general well-being needs of older Australians.

Travel demand for older Australians

Older Australians looking to travel are likely to be an increasingly important market for the Tourism industry over the next five years. Revenue across the industry is expected to rise at an annualised 15.9% over the five years through 2025-26, to $149.1 billion. This growth is anticipated to be partially fuelled by retirees looking to boost their leisure travel, particularly following the COVID-19 pandemic. The Travel Agency and Tour Arrangement Services industry is expected to benefit from a surge in demand from senior Australians and recent retirees who have delayed travel plans due to the pandemic.

People aged over 65 account for 16.6% of revenue in the Travel Insurance industry. Despite accounting for fewer travellers overall relative to younger demographics, people aged over 65 account for a significant share of demand for travel insurance. Older travellers have higher disposable incomes and more experience with insurance products than younger age groups, making them more likely to purchase policies. Travel insurance is also more expensive for senior travellers due to pre-existing health conditions that could result in medical claims, further driving revenue growth. Revenue for the Travel Insurance industry is expected to grow at an annualised 9.7% over the five years through 2025-26, to $1.1 billion.

Specialised medical care to help higher-risk population

Senior Australians will demand higher-quality health care on a more frequent basis over the next five years. People aged 65 and over already account for 40.6% of revenue in the Health Services industry, despite accounting for approximately 15% of the Australian population. Key industries to benefit from this trend include Diagnostic Imaging Services, Specialist Medical Services and Chiropractic and Osteopathic Services. Senior Australians also have a high incidence of obesity, which is expected to drive up health needs. Across the population, over 70% of Australians are expected to be either overweight or obese in 2020-21.

As rising medical costs and higher rates of chronic conditions put stress on the Australian healthcare system, preventative care to improve the health and wellbeing of ageing Australians will be increasingly emphasised. Health consciousness is forecast to continue to increase over the next five years, leading older individuals to place greater focus on exercise and diet. This trend is expected to support industries such as Gyms and Fitness Centres, Pilates and Yoga Studios and Health Snack Food Production.

Caring for the elderly

The rising number of aged Australians is also expected to provide long-term support to the Aged Care Residential Services industry, as well as the Retirement Villages industry. The residential aged care services industry is anticipated to be valued at $23.9 billion in 2021-22. The recent Royal Commission into Aged Care Quality and Safety found that funding will need to rise to 2.75% of GDP by 2050, in contrast with the current forecast of 1.34%. Industry revenue is projected to grow at an annualised 4.5% over the five years through 2025-26, to $30.7 billion. Additional growth beyond this forecast may occur if the Federal Government commits greater funding towards aged care in the May 2021 budget.

Outlook

The upcoming demographic shift brought on by the aging baby boomer generation will have broad economic implications for many Australian industries. As Australia’s largest age cohort advances into their golden years, opportunities are likely to arise for industries able to cater to their needs. In coming years, companies in an array of health, retail and service-related industries will need to adjust to this evolution in the consumer marketplace to thrive.

IBISWorld reports used to develop this release:

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