Hello there,

Population aging is a shift in the distribution of a country's population towards older ages. This is usually reflected in an increase in the population's mean and median ages, a decline in the proportion of the population composed of children, and a rise in the proportion of the population composed of elderly. Population ageing is widespread across the world

Shortage of workers. An ageing population could lead to a shortage of workers and hence push up wages causing wage inflation. Alternatively, firms may have to respond by encouraging more people to enter the workforce, through offering flexible working practices.

Those in work may have to pay higher taxes. This could create disincentives to work and disincentives for firms to invest. Therefore there could be a fall in productivity and growth.

 Increased government spending on health care and pensions. Also, those in retirement tend to pay lower income taxes because they are not working. This combination of higher spending commitments and lower tax revenue is a source of concern for Western governments – especially those with existing debt issues and unfunded pension schemes.

Prevention

Make people work longer: This could involve increasing the retirement age from 65 to 70. From an economic point of view this is beneficial because it leads to more tax revenue (people will pay income tax for longer) and more consumer spending.

 Means-tested pensions: This means pensions are targeted just to those on low incomes, and those who do not have a private pension. This helps to reduce inequality and reduce the total cost of pensions.

Encourage private pensions : Governments could make it obligatory for firms to provide a private pension.

Hope this helps.