Population Ageing : An International Phenomenon

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INTRODUCTION
Population ageing is an international phenomenon. With average life expectancy steadily increasing throughout the world – due to factors such as higher living standards, improved healthcare and the post-war baby-boom – more and more people are living to old age. This is increasing the proportion of ‘older adults’ (>65 years) among the population. In fact, it is estimated that of all the people in human history to have ever reached the age of 65, half are alive now (Pearce, 2010). This trend is particularly apparent in developed countries such as the UK where as of June 2014, the number of older adults amounts to 11.1 million (17.4% of the UK population) (Office for National Statistics, 2014). Moreover, growth in this age group
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shares, bonds, property, ISAs (Individual Savings Accounts)) in order to supplement their savings/pensions. These investment decisions are often made independently and therefore require the individual to navigate the complicated and uncertain world of finance. Obviously, this poses a potential risk to their entire livelihoods if their investments do not turn out profitable. Furthermore, the likelihood of this risk of unprofitability occurring is being exacerbated by the following factors:
1. Financial literacy: This is a worldwide problem, even in developed countries with developed annuity markets such as the UK. Cardinale et al (2002) report that the large majority of UK retirees continue to choose bond-backed annuities which are often inappropriate investments given the fact that they may be spending twenty years or more in retirement. In fact, financial literacy is so poor that 40% of people in the UK who own an equity ISA are not aware that its value fluctuates with the stock market whilst 15% of people who own a cash ISA think its value does (Financial Services Authority, 2005). In the US, 55% of adults and 66% of high-school students did not understand the concept of inflation or interest rates, and in Australia, 37% of people with investments did not know that their investments could fluctuate in value (OECD, 2004). This lack of financial knowledge in the population
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