Impact of the aging population on the economy?

Aging population is the group of people who cross the age of 65 which is the bar for retirement in most
places, it has both advantages and disadvantages on the economy. It may have a negative impact on the
economy as it increases the dependency ratio as there are fewer people to work and those few people have
the stress of supporting the aging population as well. The working population would be taxed higher rates
which would decrease morale of workers as their disposable income would decrease, this is due to the
government’s responsibility to increase spending on pensions, healthcare. This increased spending by the
government on healthcare will have an opportunity cost which means the next best alternative forgone for
example the same money spent on pensions could be used on education or infrastructural development.
Moreover, it would also decrease the workforce creating a shortage of workers pushing the labour costs
upward, this would cause cost-push inflation. On the other hand, aging population may have a positive
impact on the economy as they can be viewed as an economic asset, as they provide years of skills and
experience for the young generations. Also, some firms may employ older people due to government
schemes, this would increase productivity of the firms as these people will have immense skills and
experience to make work more productive. Also, if the labour force of a country is large aging population
should not be a problem as the dependency ratio will not be large. Moreover, aging population is a good
sign of the country’s healthcare services. Hence, aging population has both a positive and negative
impact on a countries aconomy.