The UN projects that the ratio of working-age adults (aged 15 to 64) to elderly (aged 65 and over) in the developed world will drop from 4.5 to 1 today to 2.2 to 1 in 2050. The actual ratio of contributing workers to retired beneficiaries is lower—since not all younger adults work and since most older adults retire before age 65—and is due to drop further. According to estimates by the International Monetary Fund (IMF),* this “support” ratio will fall by 2050 to 1.5 to 1 in Japan, to 1.4 to 1 in France, and to 1.2 to 1 in Germany. In at least one country, Italy, it may sink beneath 1 to 1, meaning that more people will be collecting benefits than paying taxes.
...The official projections, in fact, rest on a remarkably optimistic set of assumptions about future economic and demographic developments. They assume that unemployment rates in most countries will fall, that labor-force participation rates will rise, and that fertility will rebound back toward the replacement level. All of these developments increase the projected size of the workforce and tax base, and hence decrease the projected pension cost rate. The projections also assume that the historical rate of improvement in longevity will slow.