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Aging Population Offers Opportunity

While an aging population is certainly a public policy challenge, it also represents an investment opportunity, says a report from CIBC World Markets Inc. It says that for investors and firms, an aging population "represents an opportunity to cash in on sectors that will benefit from the expanding ‘grey' market." The ratio of Canadians that are older than 65 to those that are of working age is forecast to increase at a faster rate in the next decade or two than in the U.S. Canada's population will also age faster than China, Russia, and a number of major western European countries. The report says this is important because, according to life cycle theory, attitudes towards risk and savings vary with age. Moreover, the evidence suggests Canadian household savings patterns will adjust gradually with age and an aging society is likely to need more, rather than less, capital. A number of sectors stand to benefit from an expected surge in age-related demand including healthcare, various leisure activities, and financial products and services geared to the needs of a longer lifespan. "The resulting bidding up of required returns could help to temper an age-related savings decline, as could flows into Canada from higher savings countries, given demographic differences between jurisdictions," it says.

Courtesy of Benefits and Pensions Monitor website News Alerts

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