A recent report from Deutsche Bank contradicts concerns about America's aging population straining healthcare and pensions, suggesting that healthier, longer-working individuals will adjust their investment and consumption patterns, thus averting a fiscal crisis. The report highlights the global rise in life expectancy and the proportion of the median age—now above 40%, a significant increase from 35% in 1986.
The authors note an uptick in working years beyond traditional retirement age, leading to higher returns via a shift towards stocks over bonds. This trend is evident in the rising U.K. equity ownership. Federal Reserve data supports this observation, showing U.S. citizens over 70 own 29.5% of corporate equities and mutual funds today, an increase from 21.7% in 1990. Meanwhile, the 55-to-69 age bracket owns 45%, up from 37.2%.
The U.S., one of the best performing markets globally, continues to attract investment from the middle classes of wealthier emerging markets. The S&P 500 has seen an increase of 11% this year alone, and Citigroup (NYSE:C) data shows the U.S. trading at 19.8 times this year’s earnings—surpassing both the developed market average of 17 and the emerging market average of 12.9.
The Deutsche Bank report forecasts that post-2030, the U.S. will accommodate a larger share of the key growth demographic (30-to-44) than Western Europe or China. This prediction suggests that the trend of increased investment by older individuals is likely to continue, given the country's robust performance and growing attractiveness to both domestic and international investors.
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