One result of falling fertility levels is the decrease in the number of working-age people available to support the ever-increasing percentage of 65+, mainly non-working, retirees in the population. Italy provides the best example of this trend.



As can be seen in the chart, in 1970, every retiree was supported by the taxes of close to 6 working people. Now there are only 2.5 people supporting each retiree. In 25 years, each retiree will be dependent on the taxes paid by just 1 person of working age.

The figures, as shocking as they look, are only part of the story. The equation looks even more alarming when not simply counting the number of retirees, but also factoring in their far higher cost to Governments. Out of all the age groups in the population, retirees cost Governments the most due to unfunded pension payments, alongside much higher medical and care costs. Estimates by the UK’s Office for Budget Responsibility suggest that 75-year olds cost the Government three times that of 45-year olds in terms of annual spending. The rapidly expanding number of 80+ pensioners cost significantly more per capita.

These numbers suggest that each working person, in most developed countries, may soon have to support the equivalent of two or more retirees – in addition to all other regular Government costs – which is an unsustainable tax burden.
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