Welcome to The Conversation’s series on megatrends. What are the compelling economic, social, environmental, political and technological changes Australia must grapple with over the coming decades?

In this series, Stefan Hajkowicz explores in more detail some of these issues as part of the CSIRO’s new report, Our Future World 2012.

Today, he discusses how the world is ageing and the challenges that creates.

An academic friend of mine told me that getting old isn’t a problem. You’ve only got one option. That’s to get old. But choosing where to go for your next holiday is a problem. You’ve got lots of options. There is much truth in this observation and I frequently recount it in my lectures on decision theory. But while old age is inevitable, as individuals and as a society, we have many options about how we age.

The Forever Young megatrend looks into the ageing population and the implications for health care and retirement models. And whether you look at Australia, the OECD or the whole world the data reveal an increasingly elderly demographic.

Demographic forecasts by the Australian Bureau of Statistics reveal the extent of change in the nation’s age profile. In 2011, 14% of the Australian population was aged 65 years and over. By 2056, this proportion is predicted to rise to between 23% and 25%.

It’s happening in other OECD countries. Japan has the fastest speed of ageing amongst the world’s countries. The Japanese Statistics Bureau reports that in 1950, 4.5% of Japan’s population was over 70 years old. By 2010, it was 23%. By 2050, it is forecast to increase to 40%.

The whole world is getting older too. According to the United Nations the world population as a whole is ageing. In 1950, 8% of the world’s people were over 65 years old. This grew to 11.2% by 2011 and is forecast to reach 22% by 2050. This means the world will contain more than 2 billion people over the age of 60 years by the year 2050.

Some of the implications of ageing are increased health-care expenditure and the rise of chronic illness. A global analysis by Colin Mathers and Dejan Loncar (2006) finds that the portion of deaths from non-communicable diseases, including cancer and cardiovascular diseases, will increase from 59% of total deaths in 2002, to 69% of total deaths in 2030.

The ageing population and lifestyle illnesses are also drivers of growing health-care expenditure. A study by the Australian Institute of Health and Welfare forecasts growth in health-care expenditure of 189% from A$85 billion 2003 to A$246 billion by 2033. This increases health care’s share of GDP from 9.3% to 12.4% over the same time period.

Another challenge is our retirement savings gap. When the ageing population is combined with longer life expectancy we identify an additional challenge – the retirement savings gap. This is the shortfall in savings for the current workforce to have a “comfortable” retirement. An estimate of Australia’s retirement savings gap by Rice Warner Actuaries puts the figure at A$836 billion as of 30 June 2011 (A$79,200 per person).

We purposefully start the Forever Young megatrend with the words “Australia’s ageing population is an asset”. We want to emphasise the hitherto largely under-utilised resource of skills, knowledge and wisdom held by older persons. Many older people want to stay connected to the workforce and have much to contribute. A study by Jenny Onyx and Ellen Baker of 200 public sector employees in Australia found that both men and women would prefer to maintain a form of reduced employment in retirement rather than cease work altogether.

So although we can point towards some challenges about Australia’s and the world’s ageing population we can also see it as a new opportunity. We do have to get old. But there are many ways to go about doing it. In our hearts and minds, it is possible to stay forever young if we want. Let’s focus on the upside and minimise the downside. Our best retirement savings plan might be eating well, exercising well, avoiding accidents and staying active.

I don’t mind getting old so long as I’ve got plenty of friends and colleagues around me doing the same thing. In fact, it might even be fun.

More in the megatrends series:

The Silk Highway and becoming the Switzerland of Asia

Biodiversity – going, going.. gone?

Do we really need more from less?

What the future megatrends all Australians need to know about?