Expert Comment

Investing opportunities: supporting an ageing population 

With the help of technology, people have the opportunity to live healthier for longer and enjoy the extended retirements that are set to become the norm. Thomas McGarrity writes

Thomas McGarrity, director,
​​​​​​​head of equities in the British Isles,
RBC Wealth Management

Rising longevity is a success story of our time. The last century has seen advances in health care and nutrition which mean more people than ever before are living well into their 80s and beyond. Simultaneously, birth rates have fallen across the globe.

As a result, the world is seeing a sharp rise in older generations. In 2020, there were 727 million people aged 65 years or over around the world. That number is set to double to 1.5 billion by 2050.

Thanks to substantial savings and, in some countries, generous social safety nets, many of today's retirees enjoy comfortable retirements. However, older generations tend to have greater health and personal care needs than younger people.

Three industries are particularly impacted by the shift to an ageing population: healthcare, leisure and financial services.

Making healthcare sustainable

Long life doesn't necessarily mean a healthy life. In 2019, nearly 60 percent of seniors in England reported living with one or more chronic diseases. As the proportion of older people in the population rises, so will the demand for healthcare. The overwhelming need is to find ways of sustainably resourcing healthcare, with solutions making advancements in the areas of telemedicine, self-monitoring and remote surgery.

Telemedicine has seen huge growth during the Covid-19 pandemic as people have accessed advice, provisional diagnoses and treatment plans through remote appointments with healthcare professionals. Adoption of wearable devices and smart homes enables individuals to self-monitor chronic conditions such as diabetes and high blood pressure.

The data is then transmitted electronically to keep healthcare professionals informed—reducing the need for regular consultations. Additionally, remote robot-assisted surgery allows patients to undergo advanced surgical interventions without having to travel long distances.

Meeting the increased healthcare demand of an ageing population will not only lead to significant growth opportunities for certain areas of healthcare, but also in terms of the efficiency of the whole system, it's paramount that these technological advances really bolster efficiency.

Consumption and leisure trends

Many retirees have the time, money and health to pursue a broad range of leisure activities. Travel, golf, boating, gardening and dining out are all popular. But there's also a growing interest in health and wellbeing, particularly among early retirees who want to stay fit and active.

Sporting goods, physical activity programmes and nutrition are all potential growth areas for this age group. So too are beauty products, with an emphasis on anti-ageing and fashion, including eyewear. Devices such as smart hearing aids and eyewear can improve an older individual's enjoyment of entertainment and make it safer for them to be out and about.

Accommodation is also a growth area. Many retirees prefer to stay within their own communities, and to meet their needs, companies are creating ways of upgrading existing housing, transport and community facilities. Studies show that older people like to remain as independent as possible. And increasingly, technology is helping them do this. Home care services involving smart devices and robot assistants can help keep people active, independent and socially connected.

When it comes to meeting the demand for retirement properties in the UK, the numbers are stark. A report published by the Centre for the Study of Financial Innovation, found that less than three percent of UK homes cater to the retirement market. Since 2010, around 7,000 new retirement properties have been added despite demand being well over that.

Financial services: plugging the gap

The prospect of extended retirements creates a strong incentive to save, particularly in countries where social safety nets are limited. In countries where state pensions absorb an ever-increasing proportion of public finances, governments are encouraging people to save for their own retirements, such as auto-enrolled occupational pension schemes.

As more and more people build up substantial savings pots, there will be a growing demand for retirement planning services. These services are increasingly being delivered through online tools and platforms, relying on remote access with little personal contactThis raises concerns that people who lack digital skills may find retirement planning difficult. There will continue to be a demand for personal relationships in retirement planning, and premium products with a higher level of personal contact.

In summary, we expect technology to change how healthcare, leisure and financial services better interact to reduce costs and enhance lives. For example, wearable health monitoring devices could give insurance customers the opportunity to reduce their premiums, and renewed interest in fitness and nutrition feeds into better health, therefore reducing demand on healthcare.

With the help of technology, ageing populations have an opportunity to enjoy extended retirements that are set to become the norm.