Which Companies Will Suffer as the US Population Ages?

By Trey Thoelcke Updated Jan 13, 11:29AM EST · Published Mar 28, 7:35AM EDT

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Which Companies Will Suffer as the US Population Ages? — © Thinkstock

America is aging. At last count, the percentage of the U.S. population age 65 and over was 14.1%, or just shy of 45 million individuals. By 2050, estimates put this figure at 21.7% for a 54% increase across the period. By 2060, there will be close to 100 million U.S. people over 65. This sort of shift will have an impact on the dynamics of the U.S. economy and its macro components: Social Security, workforce and taxation, to name a few.

There’s also a microeconomic impact of an aging population, one that affects certain industries and their constituent companies. Over the next 40 years, some stocks should do very well in the wake of a demographic shift. Some, not so much. Here are some industries and companies that could be set to take a hit as the U.S. population ages.

First, the health insurance space. As a population ages, its need for health care increases. Yes, some of the cost will be borne by the government via whatever public programs are available at the mid-point of this century, but private health insurance companies will have to foot a large portion of the bill. This is a twofold hit. First, the more elderly individuals, the more treatments, surgeries and care insurance companies will have to cover. Second, as the population ages, improvements in health care should lead to longer life. Some experts suggest the first person to live to 150 has already been born. This will lead to a more prolonged period of increased payouts. Any or all of the big five health insurers in the United States, UnitedHealth Group Inc. (NYSE: UNH), Cigna Corp. (NYSE: CI), Humana Inc. (NYSE: HUM), Aetna Inc. (NYSE: AET) and Anthem Inc. (NYSE: ANTM), look set to suffer.

Next, retail. Specifically, discretionary retail, or luxury items. As today’s workforce shifts into retirement, its combined income will effectively halve. Without an expanding younger generation to makeup the shortfall, dollars spent on things like cars, clothing (retirees spend less on clothing) and restaurant (retirees eat out less, and for less, than the working adult population) meals will decline. Companies set to suffer the fallout from this contraction in dollar spending are General Motors Co. (NYSE: GM), Macy’s Inc. (NYSE: M) and Darden Restaurants Inc. (NYSE: DRI) among others.
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Finally, one that may roil the current older population, but that is backed up by statistics: car insurance. Data suggests the elderly population is far more likely to get in an accident in a motor vehicle than the population aged 18 to 65, and this is going to mean more frequent, and higher value payouts for car insurance companies across the United States. Yes, these companies likely will offset some of the added cost through higher premiums, but they can only mitigate to a certain extent. Which companies are in the firing line? Topping the list are the national insurers like Allstate Corp. (NYSE: ALL), but also at risk is Berkshire Hathaway Inc. (NYSE: BRK-A), which owns Geico.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.