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Riding The Age Demographics Wave To Higher Returns

Jun. 01, 2015 5:41 PM ETWELL, PEAK, MS, OHI, SBRA, VGHCX, VTR, WFC, FSPHX28 Comments


  • The percentage of the U.S. and global population over age 65 is growing fast, due to the postwar bump in birth rates known as the Baby Boom.
  • On top of this bump, people are living longer due to improvements in medical care and healthier lifestyles.
  • This aging population trend presents opportunities for investors to ride the wave to higher returns in several sectors.

In the U.S., we refer to the postwar bump in the birth rate as the "baby boom generation" -- "boomers" for short. While we don't often hear or read about the global baby boom generation, it is a real global phenomenon. In several countries, the boomers are an even larger trend than they are in the U.S. This boomer population wave will slowly ripple across the globe over the next 30 years, resulting in long-term investment opportunities in some sectors, and potentially lower investment returns in others.

In this article, I will endeavor to show the magnitude of the this trend and provide some sector recommendations as well as specific recommendations for capitalizing on the aging population trend. I plan for this to be a three-part series, with this first article focusing on the investment opportunities primarily within the United States as a result of the boomers' retirement from the workforce. The second article will focus on the investment sectors that will potentially suffer from this aging population trend in the U.S.; the third article will focus on the global investment opportunities and risks resulting from the global boomer wave.

We Are Getting Older

We all know we are getting older -- the birthdays just keep coming like clockwork. Unlike birthdays, it is a little harder to appreciate that, as a population, we are getting collectively older in the U.S. and around the globe.

The chart above is from a United Nations report, revised in 2013, on the aging trend globally and in the U.S. While total population continues to grow in the U.S. and globally, by far the largest percentage increase is in the proportion of the population over 65 years old. In the U.S., between 2010 and 2050, this segment of the population is expected to realize a 111% increase. Globally, the population shift is even larger, with a 181% increase

This article was written by

Dirk Leach  Bachelor of Science in Nuclear Engineering from University of Michigan (Summa Cum Laude)  Master of Science in Environmental Engineering from Washington State University  Executive MBA Program at Stanford University  41 year career in nuclear engineering, nuclear facility construction, US government contracting, DOE weapons complex, DOD contingency response and forward operating base design and construction.  Avid investor for more than 40 years, most of that time with the Vanguard Group. ***************************************************************************************************Carole Leach  Bachelor of Science Mechanical Engineering from Carnegie-Mellon University  Master of Science in Environmental Engineering from Washington State University  35 year career spanning the areas of commercial nuclear power engineering services, nuclear waste clean-up engineering, management, and technical consulting with a focus on safety.

Analyst’s Disclosure: The author is long OHI, SBRA, VGHCX. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

The author may initiate long positions in any of the stocks or funds listed in this article in the next 72 hours.

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