Goldman Gives Millennials Complete Investing Framework To Profit Off Boomer Generation

Populations worldwide are aging at an alarming rate, presenting challenges and opportunities for investors.

Among the challenges are slower economic growth and high debt loads driven by declining fertility rates and a shrinking workforce. In demographically challenged countries, governments spend more on pensions, healthcare, and other social security programs for the elderly, increasing public debt loads. 

As a demographic crisis continues to unfold globally, a team of Goldman Sachs analysts reassured clients on Wednesday that the world isn't ending; rather, big investment opportunities exist in profiting off a growing population entering their golden years. 

The team of analysts led by Evan Tylenda and Madeline Meyer provided clients with the understanding that global populations have already peaked:

Global populations are already peaking as the number of younger individuals under the age of 19 has peaked. While global populations are still expected to rise by c.20% by 2050, seniors over the age of 65 are expected to rise by 100% from 800 mn to c.1.6 bn, representing a disproportionate share of overall population growth.

With the coming explosion in the senior population, analysts have developed an investing framework for investors to capitalize on maturing economies and this demographic trend. They said, "We see tailwinds in three key areas — Healthcare, Senior Living and Care, and Entertainment & Experience." 

The Demographic Dilemma is explained in charts: 

Rapidly Aging Populations as individuals over the age of 65 are set to double from 800mn to 1.6bn by 2050 and represent a disproportionate share of overall global population growth out to 2050 (50% of growth vs. only 10 % of population today) and (65-70%) beyond

Declining working-age populations, driven by falling fertility rates, will have labour shortage and shrinking tax base implications for industries and governments.

Accelerating old-age dependency ratios, where shrinking working-age populations are tasked with supporting a growing aging population, putting further strain on governments and individuals.

Aging Populations in the Numbers...

The analysts see tailwinds in three key areas: Healthcare, Senior Living and Care, and Entertainment & Experiences. They outlined the most exposed stocks to spending shifts linked to an aging population (bold is "Buy"-rated stocks):

Here's a visual of the spending shifts by age group: 

Older populations have much higher healthcare spending on a per capita basis. 

Aging Population Healthcare-exposed stocks

Health Equipment and Diagnostics/Life Science Tools companies exposed to aging population theme

Senior care and Home Health companies exposed to independent living improvements for an aging population

Healthcare property and senior living companies and REITs for an aging population

Aging Population Entertainment & Experience-exposed Stocks

In a separate but recent note, Morgan Stanley's Paul Walsh told clients that by 2030, there will be one million 100-year-olds living across five key geographies. This provides investors with the geographies to focus on to capitalize off the elderly. 

Millennials and Gen Z should take note of these tailwinds, which capitalize on spending trends driven by Baby Boomers and older generations.