The Baby Boom effect

It is becoming a truism that Britain as a nation is getting older, fast.

By 2025, more than a third of the UK's population will be over 55 years old. People are living longer and staying active until much later in life. Headlines warn of a "demographic time bomb" and the pensions crisis.

The reason is an unprecedented demographic shift, the number of young people is dwindling as the older population rapidly expands.

The underlying causes are that we are living longer and having fewer children - well below the replacement rate. But it is the baby boomer generation – who are just starting to retire, that is accelerating the trend – like a pig swallowed by a python, it is moving steadily down the snake - and noticeably expanding its waistline.

For the first time, numbers people of pensionable age have overtaken children under 16 and by 2025, the number of over-60 year olds will also have passed the under-25 year olds for the first time.

Although life expectancy at birth is increasing, an even more telling figure is the increase in life expectancy after 60. In the UK, a man who turned 60 in 1981 could expect to live another 16 years and a woman almost 21 years. By 2026 this will rise to almost 24 years for men and almost 27 for women - and even this may be an underestimate. However, it is the over-80s that is the fastest growing age group – accounting for 5% - or 2.7 million of the population.

There is increasing concern about the ratio of children and people over 65, compared with the sector of the population that is of working age.

As the ratio rises, maintaining living standards for the dependent population becomes more of a challenge because the relatively shrinking workforce is put under strain.

The traditional arrangement of the current working population funding retired people cannot work if there are too few workers. Talk of raising the retirement age, of late careers for people in their 60s and of making younger workers pay into personal pension schemes abounds.

But it’s not only work that older people contribute to society. Huge numbers care for their grandchildren unpaid, – and many care for their own elderly relatives too – a factor that is difficult to calculate in the Treasury's books but which pressure group Carers UK estimates as worth £10bn a year.

And then there's the spending power of some of the better-off of those people - many of them baby boomers – some of whom may have paid off their mortgage and avoided the worst of recent market and pension fund crashes.

Having said that, the difference in life style between the haves and have-nots could become even more marked among the elderly baby boomers and many of those in the group with no private pension, may retire to a life of near poverty as the squeeze on pensions becomes ever tighter.

But even so, researchers predict that the baby boom generation that refuses to grow up, will revolutionise what it means to be old. They are likely to be demanding and imaginative consumers of both products and services and will refuse to be defined by their age-group.

These changing age structures in the population point to the need for radical changes in health and social care and are fuelling the current debate. Consideration is already being given to the idea of a compulsory social insurance scheme to pay for the cost of caring for older people.

By 2030, two million more people may need help with dressing, washing, shopping and eating. This is just a snapshot of the changing – and conflicting bulges of the UK's ageing population - but its progress is already well underway and its effect will be felt for many decades.