The whole notion of what “old” is, is changing. People are undoubtedly living longer, but what the raw numbers don’t spell out – and what pessimists about this demographic shift miss – are the positives and possibilities represented by this longevity revolution.
“A person who was 70 in 2022 had the equivalent cognitive health score as a 53-year old in 2000," according to a widely-cited IMF report on aging. https://www.imf.org/en/publications/fandd/issues/2025/06/sustaining-growth-in-an-aging-world-bertrand-grussAnd it’s not just cognitive function. People are physically more robust for many more years than was the case only a few decades ago, a trend that’s bound to continue thanks to technological innovation and healthier lifestyles.
James McNeill Whistler’s famous portrait of his mother shows how far we’ve come. Shockingly, the dignified ancient woman on the canvas was a mere 67 years old when, in 1871, she sat for the painting. That’s barely pension age in the UK from next year, though it was already double her life expectancy at birth. These days, she’d be far more likely to be rocking on a dance floor than perching on a rocking chair, while also looking forward to living another 20 to 21 years on average.
Annual healthcare spending by age group (USD per capita)
Source: Centers for Medicare & Medicaid Services (CMS) and the National Health Expenditure Accounts (NHEA), Breaking the cost curve (2025) Deloitte Insights, Pictet Asset Management. Data as at 12.12.2025.
Not okay boomer
The oldest baby boomers – the post-WWII baby bulge generation that’s been shaping the world for three quarters of a century – are now reaching their 80s while the youngest cohort is reaching retirement age.
That matters. And in many ways. For instance, annual US per capita healthcare spending by the over 80s is roughly 3.5 times that of working age populations – the same proportion as elsewhere in the developed world (see Fig. 1).
At the same time, the age structure of populations – known as the demographic pyramid – is increasingly top heavy. Italy is a particularly prominent example. As recently as 1994, Italy’s pyramid was still an actual pyramid, relatively few old people, relatively many children and something in-between for those of working age. Now there’s a huge over-representation of people around retirement age, with very few children coming through (see Fig. 2).
The Italian pyramid has been consigned to history – and it’s not going to go back anytime soon. That’s because demographics is one area where it’s easy to forecast what’ll happen decades into the future. After all, children born now won’t tend to have their own children for another quarter of a century. As a result, by 2040 there will be 26% more Europeans above retirement age than there are now, and 6% fewer in the working age bracket.
Nor is this just a European phenomenon. Fertility rates have collapsed worldwide. In 1965 women on average had 5 children. Now that number is 2.25. And in many developed countries it is far below the population replacement rate of around 2.1 – South Korea’s is 0.7, China’s 1 while across high income countries it’s a little under 1.5. Source: Our World in Data
Projected population change by country by 2040 (%)
Source: Eurostat and ONS projections, MS Research, Pictet Asset Management. Data as at 12.12.2025.
Getting more out of shrinking workforces
As populations age, the balance of the workforce shifts. Fewer young entrants mean businesses must do more with less. The challenge is not simply to fill gaps, but to unlock new levels of efficiency and output. This is where technology steps in — not as a replacement for people, but as an enabler.
Across industries, companies are adopting productivity solutions that help workers achieve more. Automation streamlines routine tasks, freeing up time for higher-value work. Artificial intelligence supports decision-making and enhances accuracy. Enterprise software connects teams, optimises processes, and ensures that expertise is put to best use.
In this environment, experience and adaptability are assets. The shortage of talent, driven by demographic trends, is prompting organisations to invest in tools that support their existing workforce—making it possible for people to remain productive and engaged, regardless of age. The result is a more resilient, capable workforce, ready to meet the demands of a changing world.
Measuring the effects
It’s necessary to look beyond financial metrics to identify the companies with the products and services that will have the most significant effect on improving longevity, quality of life and productivity. At Pictet, we benefit from the insights of our external experts, through our Thematic Advisory Boards. And we use a bespoke methodology: our Longevity Impact Factor Evaluation (LIFE).
Designed in collaboration with Unisanté, the Lausanne medical and public health university, LIFE helps to measure the healthspan – years lived adjusted for quality – that a company’s products deliver to patients benefiting from a related treatment. In parallel, the LIFE methodology helps determine the degree to which a company’s services will boost the productivity of workers using them. This then is weighed against the cost of adopting those processes, helping us determine their value.
This approach puts societal impact on a par with economic efficiency and investment potential, helping us gauge the degree to which a company’s offering matches the aims of our strategy – what we call purity.
Building on expertise
For three decades, Pictet Asset Management has championed thematic investing, guided by the belief that the world’s biggest challenges are also its greatest opportunities. Our Longevity strategy is rooted in this tradition, combining rigorous analysis with a commitment to sustainability and positive change. The future is not just longer; it is brighter, richer, and more connected than ever before.
Silver linings
Ageing populations aren't entirely bad news, at least not in the context of wider technological change. And demand for these new technologies and processes is only going to increase with the demographic shift, which will drive substantial revenue and earnings growth for their owners.
In fact, these forces are alredy acting on each other: a shrinking pool of labour is driving automation; AI is enhancing productivity and innovation in ways that will only accelerate with further development and adoption. This overlap, in turn, is creating clusters of investment opportunities, as the Pictet Research Institute argues in its paper 'Demographics and technology.'
So although health spending is projected to increase sharply, recent history suggests the burden of these costs can be met with rises in workforce productivity.
That's beause firms have already been investing heavily in processes to offset shortfalls in the supply of labour. Software, automation and, increasingly, AI are helping to fill this gap.
Most investors seem to be focusing on the ageing half of the demographic shift, but really it is composed of two parts: ageing populations and shrinking workforces. Each offers a range of investment opportunties, be it goods and services focused on healthier, longer living, or on improving workforce productivity.
