Investing in an Aging Population: How Demographic Trends Shape Investment Opportunities

This week in our newsletter:

• The Rise of ‘Underemployment’ in College Graduates
• Anthropic’s Mythos is Scaring Wall Street
• Teens Can Now Trade Stocks Without Parental Approval

Read the full newsletter here for bonus exclusive content.

The world is getting older, fast. By 2030, one in every six people on the planet will be over the age of 65, according to the World Health Organization.

In the US, the population aged 65 and older is growing at an annual rate of 1.6% over the next 10 years. By contrast, the population aged 24 and younger is shrinking by 0.8% annually.

There’s an expression: “demography is destiny.”ⁱ And there’s a guy who took that expression and ran with it in the investing context. His name is Harry Dent, Jr.

Introducing: Investing Based on Demographic Trends

Harry Dent is a market prognosticator who once had real name recognition beyond the usual investing circles. For a while, he was the guy people called when they wanted a big, sweeping explanation for where the economy was headed next.

Dent built his reputation on a simple but powerful idea: that demographics drive economics. In his telling, people move through predictable life stages: education, household formation, peak spending, and retirement. And those stages create large, visible waves in consumer demand, asset prices, and growth. If you can map the population, he argues, you can map the economy.

At the core of the Harry Dent investment thesis are spending patterns tied to age. Dent has long argued that the economy tends to rise when a large cohort enters its peak consumption years, borrowing, buying homes, raising children, and spending aggressively.

Conversely, when that cohort ages out of peak spending, growth slows, bubbles pop, and asset values come under pressure. In other words, Wall Street may think it runs on interest rates and sentiment, but Dent insists Main Street demographics are the deeper current. We agree (and one of us has based their entire investment portfolio on this idea for at least three decades). We figured, why not share?

That framework leads him to a characteristically dramatic conclusion: many booms are less durable than they look because they are riding a demographic tailwind that eventually fades. When the wave crests, investors who ignored population trends are left explaining why “permanently high plateaus” somehow became trap doors. Whether you choose to see that as insight or overreach probably depends on how much faith you have in forecasts that stretch years into the future. But Dent’s central message remains memorable: demographics are not destiny, exactly, but they are much closer to it than most investors want to admit.

A major disruptor to how these waves worked in the past has already begun to encroach as technological advances disrupt what once were, as noted above, predictable life stages. The singularity is near, after all, and once that happens, all bets are off in terms of what the average retirement age will be. Then again, if the likes of Elon Musk are right, universal basic income, after AI helps us get to a post-scarcity world, may make retirement and– indeed work as we know it– things of the past. But we digress…

For now, there’s money to be earned, saved, and invested for retirement and other things. So, what does a greying (figuratively speaking, of course, since AI will probably make that a thing of the past) population tell us about investing?

What Are the Investment Opportunities in an Aging Population?

1. Investing in Health Care

Let’s start with the obvious: health care.

According to national health expenditure data, people aged 65 and older accounted for 17% of the US Population and 37% of all personal health care spending in 2020. The average spend for that age group exceeded $22,000– roughly 2.5 times that of the average working-age adult.

Part of this is because health naturally declines with age. But what’s also crucial here is the generational wealth gap: older Americans hold a great share of all wealth.

Americans aged 55 or older currently control over 73% of the total wealth in the US, according to Federal Reserve data. With such a high concentration of wealth, healthcare spending is likely to increase significantly over the next few decades.

Think: companies focused on age-related issues and treatments, chronic disease management, and senior care.

2. Investing in Longevity and ‘Healthspan’

Beyond medical care, longevity investing is gaining traction as more and more people are looking at extending their ‘healthspan’– that’s the number of years you can expect to live in good health, free from disease or illness. Dr. Peter Attia and Byran Johnson are two of the biggest gurus in the space.

In the current medical approach, doctors often step in to extend lifespan after your physical and cognitive health have already begun to decline.

This leaves an opening for companies focused on nutrition, early intervention, care, and the treatment of conditions such as obesity or diabetes.

3. Housing for Older People

Many older adults want to remain in their homes for as long as possible (there was a poignant episode of The Pitt about this near the end of Season 2).

This is creating a fast-growing market for technology and services that make independent living more viable.

Investors can find long-term opportunities in technologies such as telehealth platforms, home health aides, smart home technology, and remote monitoring services.

And where people live matters just as much as how they live– which brings us to real estate.

4. REITs (or Real Estate Investment Trusts)

A REIT gives investors access to professionally managed, income-producing real estate portfolios without requiring them to buy or manage properties directly. By law, REITs are required to distribute at least 90% of their income as dividends.

The most relevant categories here are REITs that own and operate medical office buildings, senior housing communities, skilled nursing facilities, and assisted living properties.

According to Lauren Hochfelder at Morgan Stanley, new construction of senior housing is down 60% compared to pre-COVID levels, while high construction costs are keeping supply constrained. That imbalance creates pricing power that drives rental growth and stronger cash flows over time.

As we’ve previously explored, REITs may also improve one’s portfolio diversification.

REITs have historically outperformed the S&P 500, although in recent years, broad equities have pulled ahead, largely thanks to AI-fueled tech stocks doing the heavy lifting. That said, recent months have seen tech stocks faltering, and REITs have once more outperformed equities, with a 9.6% year-to-date total return advantage over the S&P 500 as of March 17.

5. The Gig Economy

A growing number of older adults are choosing to stay in the workforce longer, either delaying their retirement or returning to work after retiring.

Beyond the rising cost of living and economic uncertainty, much of the motivation here is simply a desire for purpose and connection.

The gig economy is particularly well-positioned to benefit here. Flexible work arrangements, such as freelancing, consulting, or part-time gig work, are increasingly attractive to older adults looking to supplement their retirement income without returning to full-time employment.

For investors, this shift creates opportunities in businesses that facilitate the gig economy or support retraining for seniors.

6. The Great Wealth Transfer

We are currently in the midst of the greatest wealth transfer in history– an estimated $124 trillion in wealth is projected to change hands by 2048, according to Bank of America. Of that total, about $106 trillion will go to heirs, primarily Gen X, millennials, and Gen Z.

This is one reason why there has been so much consolidation of registered investment advisory firms.

This transfer is already underway (and has been for years), with wealth increasingly being transferred by Baby Boomers during their lifetimes, sustaining significant opportunities in financial services.

How to Act on these Suggestions?

There are bad companies in every industry and sector. If this investment thesis interests you, speak to your investment advisor if you have one (if you don’t, you may want to read this). Do your own research and analysis before you invest. And finally, unless you are already well diversified with significant holdings in publicly traded securities, stay away from alternative assets.

Endnotes

i. Its coinage is commonly attributed to French sociologist Auguste Comte (1798–1857), suggesting that the size and structure of a population dictate its future. It highlights that population trends– such as aging, birth rates, and migration– shape economic, social, and political outcomes more than temporary events.