Baby boomtime

Many countries experienced a baby boom following World War II but in Australia the high fertility persisted longer than in most and its impact on age structure was exacerbated by the influx of unprecedented numbers of young immigrants’ families.

Moreover, the impact of the baby boomer generation born between 1946 and 1964 has been even more marked because the preceding generation born in the Depression and War years was so small due to low fertility and limited immigration. In addition to this, the halving of fertility rates between the baby boomer mothers and their daughters has ensured that later generations have not been able to outnumber baby boomers.

Accordingly, the baby boom generation is demographically more significant in Australia than elsewhere despite continued immigration of younger people. In 2006 more than a quarter of Australians were baby boomers (25.7 per cent) and, perhaps more significantly, 41.8 per cent of the workforce were baby boomers.

The sheer numbers of the baby boomers who will make the significant lifecycle stage transition from working age to retirement will have a profound impact on Australia’s economy and demography. A number of sequential reports from the Productivity Commission and the Treasury Intergenerational Reports have documented this.

On the one hand a doubling of the numbers of Australians aged 65 years or older in the next two decades will place increased fiscal pressure on demand for health and aged care services, especially in the 2020s as the older baby boomers enter their late 70s and the ages when there is a steep increase in risk of chronic disease and disability.

On the other hand their exit from the labour force will see a massive loss of skill and experience while the ratio of working age Australians to older, retired Australians will halve. Hence the potential for intergenerational transfers to meet their needs will be reduced.

Policy, of course, can not influence the first of these implications - the doubling of the aged population is inevitable. However, there are many things which can be done to reduce the intergenerational pressures.

First, there are a raft of ways in which baby boomers can reduce their ultimate reliance on intergenerational transfers by preparing for old age. Adequate preparation is clearly a sine que non for successful ageing. This is usually seen in terms of financial preparation and there have been warnings that many baby boomers, especially single women, have not sufficient financial resources for a long retirement. However, research is showing that the financial dimension, while crucial, is only part of the need for preparation. For example, for the first time we will have a significant proportion (around a quarter) of Australians entering retirement without a partner. Many will not have children living in the same city. Many have defined their lives by their work and will face decades of retirement with little or no idea of what they will do. Preparation for life beyond involvement in the formal paid workforce among baby boomers is a neglected area of policy concern.

A second major area of potential polity intervention to ameliorate intergenerational imbalances caused by ageing of the baby boomers relates to the workforce. Most obvious is the need to increase the retirement age of Australian workers which can improve both sides of the worker-retiree equation.

Skill and labour shortages should facilitate this process and the government has moved to encourage later retirement although there are important cultural barriers among employers relating to older workers. In addition Australia has some of the lowest workforce participation rates in the traditional working age groups of any OECD country so there are real opportunities to increase engagement with the workforce among groups currently excluded.

Policies which facilitate women developing full careers, whether or not they desire to have children, are becoming more common not only in government but also by progressive private sector employers. Australian young women should have exactly the same opportunities as young Australian men to have full family and full work lives on the basis of equity. However, it also now makes sound business sense in a labour shortage context.

In a similar vein we should be fighting against the disengagement from the workforce of socially excluded groups such as the Indigenous, poor, those from non-English speaking backgrounds and disabled communities. If we cannot achieve social inclusion of these groups in a labour shortage context, when can we? The workforce changes required are partly a matter of policy and change in regulations but it is also above all a cultural change which is needed - among workers, employers and governments.

A third area of intervention relates to population policy. To what extent do we act to increase the numbers in the working ages to offset the burgeoning numbers of baby boomers? There is a failure to appreciate that while Australia’s population is increasing at the fastest rate for 19 years, much of the growth is occurring in the older age groups as large baby boomer cohorts replace much smaller World War II-Depression cohorts. Hence between the 2001 and 2006 censuses the number of Australians in the prime workforce ages of 20 to 39 increased by 1.7 per cent while the numbers aged 50-59 increased by 14.9 per cent.

This pattern will be exacerbated over the next two decades where under even the most optimistic ABS projections the population aged 20-59 will increase by 21.2 per cent between 2004 and 2031 while those aged 65+ will increase by 136.3 per cent. Hence most population growth in Australia over the next quarter century will be confined to the older age groups.

To maintain the workforce age groups at around current numbers will necessitate keeping fertility near current levels (Total Fertility Rate 2007 - 1.855) and a substantial net gain of immigrants concentrated in the young adult ages.

None of these three areas of policy intervention offers a “silver bullet” simple solution to the pressures to arise from the retirement of baby boomers but together they can ensure that Australia can cope with this parametric shock to its demography and economy. However, the necessity is that relevant policy change is initiated in all these areas as a matter of some urgency.

While the “crunch” of baby boomers moving into the high risk “old old” age groups is two decades away for those interventions to be effective they need to be introduced now. Australia can cope with the ageing shock of the baby boomers but only if there is no complacency and these changes are made now.

While there has been a flurry of activity to examine the demographic and economic implications of the ageing of baby boomers much less is understood about the social and cultural impacts. As a group, baby boomers are as heterogeneous as any other Australian generation but they do differ from earlier and later generations in some significant ways which will influence their experience in old age and impact on Australian society more generally. While there is little empirical research on how baby boomers are likely to behave in their older years a few informed speculations can be made here from a demographic perspective.

An important question relates to where will the baby boomers live in the older years. Traditionally in Australia older people have been the least likely of all Australians to move house. Over the 2001-06 period only 22.0 per cent of Australians aged over 65 moved house compared with 54.0 per cent of those aged 45 or less. Will baby boomers follow this pattern or will they be more likely to move during their older years?

Even if only the same proportion move the fact that there are so many of them will mean that some trends in older population movement which are already in evidence will involve many more people. Hence sea-change and tree-change moves will be much more substantial. Within major metropolitan areas there are some indications that baby boomers are significant in the migration into central, inner and seaside suburbs. Will they move to be closer to their children (and grandchildren)? What is the significance of such a high percentage not having a partner? Does that mean new forms of group housing may become popular in particular locations?

Nothing is known about the mobility intentions of baby boomers after retirement and research is needed. What seems certain, however, is that the spatial distribution of baby boomers as older people in Australia will be quite different to the current distribution of older Australians. Most are likely to stay in the house in which they brought up their families and the bulk of these are in low density outer suburban areas.

What does this mean for the spatial patterning of future demand for aged care services? Is there a spatial mismatch between where the services are and where older Australians will be? Does the low density of public transport and highly concentrated pattern of services location mean that baby boomers will suffer from significant isolation once they are no longer able to drive their own motor vehicles? Will suburbs have to be retrofitted if they are going to become elder friendly?

One of the new mobility tendencies among recent retirees in Australia is the “grey nomad” phenomenon in which many are taking to the road for significant parts of the year. If baby boomers engage in this to a greater extent it will mean that there will be greatly increased numbers of temporarily present populations in many parts of Australia, especially the north. The economic and environmental impacts could be considerable.

More baby boomers have survived to enter the older ages that any previous generation. Superficially then they may appear, and probably perceive themselves, as the fittest generation to enter old age. However this must be questioned. Baby boomers have the highest incidence of overweight and obesity of any current Australian generation - 72 per cent of men and 58 per cent of women aged 55-64 in 2004. The total cost to the community of obesity among baby boomers in 2005 was estimated by Access Economics to be $3.8 billion, half of it due to lost productivity. Obesity and overweight among baby boomers is almost totally neglected in Australia where the overwhelming discourse on obesity focuses on children and young families. While this indeed is an important national issue, obesity among baby boomers is also deserving of urgent attention for the following reasons:

• on an individual level it threatens the physical, social and economic wellbeing of many in this group and compromises their chances of experiencing positive ageing;
• for the nation the association between obesity and chronic disease, disability and dementia has implications for the health care system. Australia is faced with a doubling of its population aged 65 over within the next two decades, which by itself will place huge pressure on the health system. However if baby boomers enter older ages with higher levels of obesity than previous generations it will place even greater pressure on the health system;
• in addition Australia faces a doubling of the ratio of number of aged persons to those in the working age groups over the next quarter century. Among the major strategies which Australia and other OECD governments have identified to meet this challenge is increasing levels of workforce participation in older age groups. Such strategies will be heavily compromised if the obesity related health of these workers prevent them from working; and
• baby boomers are a critical workforce group contributing substantially to Australia’s business capacity, experience and productivity and obesity threatens the extent to which this capacity is harnessed and passed on to future generations of workers.

In summary the unprecedented high levels of obesity among Australian baby boomers represents an issue of national importance. Moreover because the window of opportunity to intervene to reduce levels of obesity among this group, before they enter retirement is rapidly closing, creating a sense of real urgency to the problem.

Obesity among baby boomers is caused by a complex set of interacting economic, social, environmental, cultural and health forces. It will require intervention across a diverse range of areas such as work environment, work arrangements, work-life balance, health promotion, nutrition, disease prevention, planning of residential areas and social support.

Another area where baby boomers differ from previous generations entering retirement relates to their family and household situation. As indicated earlier, while many Australians live their final years alone up to a quarter of baby boomers could enter retirement alone. They have fewer children than earlier generations and the likelihood that those children live in another state or territory or even overseas is greater than for any earlier generation of older Australians.

What does this mean for the incidence of loneliness and isolation among older people? Moreover the bulk of care for older Australians with disability or chronic illness is currently provided by family members. Clearly the extent to which this source of care can be drawn upon by baby boomers is influenced by the higher levels of divorce/separation, smaller number of children and stronger likelihood that children will not live nearby.

It has been possible in the space available here to only examine a few of the ways in which baby boomers are different from previous generations of older Australians which are likely to influence their lives in older age and impinge on wider Australian society.

They are distinctive in a myriad of social, economic and cultural ways and in their attitudes, preferences and tastes. All will impinge on how they tackle the changes of older age. Some will present challenges, others opportunities. The latter are often overlooked but there are undoubtedly opportunities arising out of the ageing of baby boomers. They are the most cashed up generation to enter old age while one would not want to overlook important economic differences within baby boomers and they are a crucially important consumer market.

Their potential for providing economic impetus to communities which they move to and live in is underappreciated. The wealth of experience and knowledge they have accumulated presents enormous opportunities for community building, enhancing social capital, volunteerism and entering social and community cohesion.