"Demography is destiny," said the positivist philosopher Auguste Comte, and nearly two centuries later, we continue to repeat his pithy aphorism, because it's not hard to see there's some truth to it. Think of the influence of the baby boomers on American culture, the stagnation of the once-unstoppable Japanese economy, or the Arab Spring upheavals: Demographics played a major role in each.

And perhaps the biggest demographic trend underway today is this: The composition of the global population is shifting toward the older end of the table. Especially in the developed world, a combination of fewer children being born and people living longer means that, as a percentage of the populous, there are more retirees and elderly, fewer workers to support them, and a relative shortage of young people coming up behind them.

In this episode of Motley Fool Answers, co-hosts Alison Southwick and Robert Brokamp are joined by Morgan Housel of venture capital firm the Collaborative Fund -- and a former Motley Fool writer -- to discuss three major ways this slow-motion demographic evolution is going to hinder economic growth, and why we should all be prepared for the shifts that are coming.

A full transcript follows the video.

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This video was recorded on April 2, 2019.

Alison Southwick: This is Motley Fool Answers! I'm Alison Southwick, and I'm joined, as always, by Roberto Brokamp, personal finance expert here at The Motley Fool.

Robert Brokamp: Hola!

Southwick: How many years have we been doing this podcast before I called you Roberto on air?

Brokamp: Four and a half or so now.

Southwick: Too many. That's four and a half too many years.

Brokamp: I think so, Al-i-sonó.

Southwick: It doesn't work.

Brokamp: No.

Southwick: In this week's episode, we're going to welcome back Morgan Housel from the Collaborative Fund to talk about how the aging workforce could have an impact on economic growth, your wallet, and your investments. All that and more on this week's episode of Motley Fool Answers.


Southwick: So, Bro... what's up?

Brokamp: Well, Alison, it's that time of year again. No, I'm not talking about March Madness. I'm not talking about the beginning of baseball season. I'm not even talking about International Children's Book Day, which is April 2nd, the day this episode becomes available, in honor of Hans Christian Andersen.

Southwick: Oh! Why Hans Christian Andersen?

Brokamp: Because he wrote so many fairy tales.

Southwick: But did he do something on April 2nd or not?

Brokamp: He was born on April 2nd.

Southwick: Oh, OK!

Brokamp: Yes. Oh, by the way. April 2nd is also National Ferret Day and National Love your Produce Manager Day, but that's not what we're here to talk about. What we're here to talk about...

Southwick: I kind of wish we were.

Brokamp: ... is Financial Health Day!

Southwick: Yaaay!

Brokamp: Yaaay! It's an annual tradition here at The Motley Fool. We just had our Financial Health Day -- our ninth Financial Health day...

Southwick: Nine? Are you serious?

Brokamp: Nine! Next year will be the 10-year anniversary. We're already starting to feel like...

Southwick: Because 10 comes after nine! I could do the math on that one!

Brokamp: Very good! Very impressive!

Southwick: Thank you! Thank you!

Brokamp: So per usual, the day featured three key components. No. 1 -- classes. We always have classes either taught by Fools or outside experts.

No. 2 -- the ability to speak with pros of some kind. This year, we had all our financial planners from Motley Fool Wealth Management -- a sister company of The Motley Fool -- and you've heard many of these folks on our show. Fools could make individual appointments with them. In the past, we've had tax experts come in and help, or you could meet with our HR folks and do sort of a benefits audit.

Then the third thing, and perhaps the most important thing, is time. Fools are encouraged to use company time to accomplish personal financial tasks.

And why are we talking about it here? Well, you may not have an employer that will allow the whole company to have a financial health day. I still think it's very important for everyone to do it, because it is my personal experience that everyone has a few things that they know they need to get done but they just haven't found the time.

So if you can take a day off during the weekday, it's a good idea, because a lot of what you need to do requires normal work hours -- going to the bank, meeting with a professional, calling someone who's open. It's better, but even a Sunday or a Saturday where you devote the whole day to your dollars I think can pay off.

What should you do on your financial health day? Well, I sort of hinted at it. Just think! What are the one, two, or three things that are just nagging at you? Weighing on you? Things you know you've meant to get done but you haven't had that chance. That's a good place to start.

But just to give you an idea of what happens here at The Fool, I'll talk about the classes we had and also maybe spur some other ideas.

We always begin the day with breakfast from The Fool just to get everyone going.

Southwick: We had Anita's breakfast burritos.

Brokamp: At 10:00 o'clock, we had Jason Moser, a former guest on the show and other Fool podcasts. He also hosts a Fool podcast. Jason talked about money and kids. He's great about teaching his girls how to invest. That's one thing you could do. If you've been meaning to sign up for a 529 savings account for college, that's another thing you could do. Or think in terms of what you have to do to protect your kids' financial futures, and in that case it's life insurance. Something like that. If you know you need life insurance, that would be a good thing to accomplish.

The next class we had was estate planning. We usually have that taught by an outside lawyer because we do believe that for most people, you really should get professional help when it comes to your estate plan. Either make that appointment with an attorney or at least do the research and the legwork, talking to people for referrals to get someone. A lot of attorneys will say that they can do a good estate plan for you, but you really want to find someone who focuses on estate planning with their practice.

Next we had a class on budgeting and super saving from Naima Barnes, who also has been on this show before. She taught budgeting but also had a panel of folks at The Fool who are good budgeters, so they talked about the spreadsheets they use. [They might] use Mint or Personal Capital.

We had Ross Andersen, an upcoming guest, who's the anti-budgeter, so he was up there on the panel saying why you shouldn't budget. His philosophy is to just make sure you're saving enough in your 401(k) and your other accounts, and then just learn to live on whatever you have left over and you don't have to budget every penny.

Southwick: But that's still budgeting.

Brokamp: It's goals-based budgeting. But anyway, either if you have a budget and you haven't checked on it, or if you always meant to, it's a good time to do it. If you never signed up for something like Mint, you can try it. You can use Google "budgeting spreadsheets." All kinds of people have offered their own templates. My favorite website on budgeting is BudgetsAreSexy.com with J. Money, who I hope to have on the show one of these days.

Southwick: Have you asked him?

Brokamp: Oh, yes!

Southwick: He said no?

Brokamp: Well, he only lives an hour away, but he's a stay-at-home dad, so it's hard for him to get away during the day. But one of these days...

Southwick: He can bring his kids in!

Brokamp: That's a good point!

Southwick: Why not? I mean, gosh, this is like a playground. Hanna always asks if she can come into work with us.

Brokamp: My kids loved coming into The Motley Fool. The next class we had was Top Money Moves for Women taught by Megan Brinsfield and me. Really, there are a lot of reasons why women generally are not as prepared financially as men. The biggest reason is women don't make as much as men, so one thing to focus on is your career. Your earning potential. Thinking about how you could make more money.

The other issues are that women actually retire sooner than men but live longer than men, which is not a good combination when it comes to retirement security, so that leads to our last class of the day, and that was retirement planning, taught by me.

Obviously one of the things you can do on your financial health day is just make sure you're saving enough for retirement. You can use a retirement calculator. You can make an appointment with a fee-only financial planner. Take a look at your 401(k). Obviously the best thing you can do for your retirement security is just to save more.

And I'll close with how I was preparing an article recently about financial regrets, so I found all kinds of surveys that asked people what their biggest regrets were, and survey after survey, regardless of the age of the people who took the survey said, "My No. 1 regret was not saving enough for retirement and delaying when I started saving for retirement."

So if you do anything else on your financial health day, find some way to save a little bit more for retirement. That's the type of thing that's going to pay off over the years in terms of thousands and tens of thousands of dollars. And that, Alison, is what's up.

Southwick: Usually you give a shout-out to Ron Lieber.

Brokamp: I do, but it's because I didn't really come up with the idea of financial health day. We had our first one in 2010 as a consequence of Ron Lieber of The New York Times writing about his own personal financial health day, because it was 2009, and The New York Times, like many other businesses in 2009, were struggling, so they furloughed employees. In other words, don't come in and we're not going to pay you. So he decided to make the most of his day off and accomplished all these important financial tasks. That's really what gave us the idea for having a companywide financial health day.

Southwick: I didn't realize he did it because he was furloughed and had nothing else to do.

Brokamp: Yes, but he made the most of it!

Southwick: Yes, he did!


Southwick: So Morgan Housel joins us today. Hey, Morgan!

Morgan Housel: How are you doing? Thanks for having me!

Southwick: Hey, thanks for coming back! So you are with the Collaborative Fund; however, longtime listeners of the show are going to remember and know you and cherish you from your days as a writer at The Motley Fool.

Housel: Some cherish, some have other feelings, but that's OK.

Southwick: No, everyone loves you! To know you is to love you!

Housel: Did you used to read the comments section? Because I did.

Southwick: Really? Did people not like you?

Brokamp: The comments section to your articles is one of the reasons why we turned off the comments section. [laughs]

Southwick: I don't know how anyone could be offended by your columns, because they're all very like... I don't know. Common sense and like...

Housel: You must not be familiar with how the internet works, then.

Southwick: Well, that's true. That's true. Well, we brought you on today to talk about the aging global population, and the workforce, and what it means for us. I think one of the best ways to start is to talk about a bar chart. I mean, it just makes for good radio.

Housel: Yes! Close your eyes and picture it.

Southwick: So here we go. Everyone close your eyes and picture a bar chart, if you will. Bro, you actually get to look at it.

Brokamp: I have it on my computer right now.

Southwick: Here we have a bar chart that you yourself created...

Housel: That's right.

Southwick: Isn't that right, Morgan? And it shows the change in working-age population between 1990 and 2019. And it shows the United States up 31%. China up 30%. France up 8%. Germany down. Japan down. Russia down.

Housel: They're down a little bit. South Korea up big. But the overall story for the last 30 years is most big economies have seen their working-age population grow.

Southwick: Great! Hey, let's move on to our next bar chart. This one shows what is going to happen over the next 30 years. And where'd you get these numbers from?

Housel: The Census Bureau.

Southwick: I've heard of them.

Housel: They're good.

Southwick: I'm familiar with them. And here's a bummer, because all of the countries we talked about -- the bar charts are now going down. The bars are going down, except for the United States, which is still going up 13%.

Brokamp: And not just down, but down...

Housel: Down a lot.

Brokamp: ... significantly.

Housel: So countries like China, Russia, South Korea, and Japan are going to have massive decreases in their working-age population over the next 30 years.

Southwick: South Korea, alone, down 30%.

Housel: The biggest story there, of course, is China largely because of its one-child policy, which has even been relaxed now, but it hasn't really made any difference in terms of their fertility rate. It's going to have a massive decrease in their working-age population over the next 30 years. Over the next 30 years, China will lose 200 million people from their workforce. Which is a lot.

Southwick: That is a lot!

Housel: Even in percentage terms for China, it's huge. Their working-age population goes from about 1 billion to 800 million.

Southwick: I get China because they had the one-child policy, but why countries like South Korea and Germany? Why are they declining as well?

Housel: There's a very long history. As countries get richer, the number of babies women have, on average, declines. That's always been the case for history, and so a lot of the countries that I highlight are generally rich countries. It's very different if you look at Sub-Saharan Africa or whatnot. India. They still have very high birth rates.

But a lot of these countries that have low birth rates and low immigration tend to have falling working-age populations over time. It's different for the United States because our birth rate for people who are born in the United States is not that high. It's below replacement rate.

Since we have a relatively high amount of immigration -- relative to France, Germany, or Italy -- and generally, on average, immigrants have a higher birth rate than people who are born in the United States, that's where most of our population growth comes from. So population growth over the next 30 years is not big in the United States. And, of course, when we're talking about 30 years, these are estimates and projections that not only could be but likely will be wrong.

But I think when you're forecasting something like population, it's an easier thing to forecast than if you're trying to forecast something like the stock market, because even if a new baby boom began today, it would take 30 years for someone to become 30 years old. It's not something that can change overnight. These things take decades for there to be a big change. We can say with pretty good certainty what population growth is going to be over the next 30 years.

The big wild card in the United States, and all over the world, is immigration, of course. Obviously there's political winds blowing one way, but those could change and start blowing in a different way. That's a big wild card in these forecasts.

Southwick: And also the type of workforce, then. So the baby boomers are dying out, and I assume they're higher-skilled labor than immigrants. That's also changing the composition of the workforce in America.

Housel: It's very different.

Southwick: Here's a fun fact. The United Nations estimates that the number of people age 60 or older will double by 2050. That's a lot of people!

Housel: And that's another big part of this, as well, is that...

Southwick: And I'll be one of them! Oh, my gosh! By 2050!

Housel: All of us will!

Southwick: That's me!

Housel: And that's another part of this. When your working-age population declines, very often, especially because people are living longer, the percentage of the population that's in retirement increases. Then you have fewer working people who are paying into Social Security and government pension systems in other countries. Fewer workers supporting more retirees, and that's when social systems like Social Security and Medicare start getting really strained.

Southwick: I've broken this down into three different ways that this aging workforce is going to hurt economic growth. The first one I've got here is fewer workers equals less economic output.

Housel: Yes. It's from the very simplest question of what makes the economy grow. It's two things. It's more people and those people becoming better at what they do and becoming more productive. Those are the only things that make an economy grow. So if you take population growth, one of the two drivers of the economy, and it goes not only to zero but it goes to negative 30% over a 30-year period, that's a massive drag on economic growth.

Whereas for pretty much all of the 20th century for these countries, they not only had big growth in their labor productivity because of technology, computers, better machines, and whatnot; but for most of the 20th century, they had huge population growth. The baby boom that happened in the United States; most countries throughout Europe and even Asia had that as well. After World War II, there was a big baby boom, and that fueled a lot of the growth in the 20th century. It will be totally different over the next 30 years.

Southwick: Don't we see now -- and this is going to get into the discussion about AI and things like that -- that increasingly we're seeing advances in productivity because of technology and automation? It's not about you need more hands to plow your field. It's now a computer can do your virtual plowing for you. Rick, stop laughing! Stop it!

Housel: Virtual plowing?

Southwick: Virtual plowing. It's on the internet.

Brokamp: There's a website for that.

Southwick: You know what it is. So it's possible that when Gary retires, we're going to replace Gary with a Gary bot.

Housel: It's possible, but the counter to that is the kind of productivity that we had in the 19th and 20th centuries was orders of magnitude more meaningful than the productivity growth that we have today. So the relative gains that society got from the car, the airplane, and electricity; compare that to Twitter, or compare that to Google and Facebook, which is...

Brokamp: Which is counterproductive.

Southwick: Where did the productivity stop?

Housel: It's because it's a productivity killer. A lot of comments have been made in this argument that the productivity growth that we had in the 20th century was this huge low-hanging fruit. The airplane, the car, and widespread electricity was massive.

Even something like air conditioning, which you might not think is that big of a deal, made it so people could work in offices during the day. If you lived in Atlanta in 1930 and you were trying to work at two in the afternoon in August, forget about it. Something as little as air conditioning has just revolutionized that. We don't see those kinds of changes with the technology that we have today.

And it shouldn't be that pessimistic, because there's a long history of people saying that all the gains were in the past and that we can't do anything else going forward. And then going forward, we'd laugh at what we did in the past. So it's easy to be pessimistic and say we're never going to have something as important as the airplane, but for most of history, we've figured out something that's pretty cool still.

Southwick: Another reason why people say an aging workforce is going to hurt the economy is that older workers are less productive.

Housel: Bro, what do you think?

Brokamp: Well, I've read the articles that have established this...

Southwick: Some of us are not that much younger than Bro, here, so let's be a little more careful there.

Brokamp: I think I'm very productive. Thank you very much! The evidence is clear that...

Housel: Humans are less productive.

Brokamp: You look at studies that looked at different states. States have different demographics in terms of age, and states with older populations have lower productivity.

Housel: Is that true for both knowledge office jobs? Obviously it makes sense for physical jobs. When you're 70 years old, your back's not as strong as it was when you were 20. Is it true for office jobs, too?

Brokamp: I don't know. I didn't dig into that deeply enough. I do know by reading enough articles that one of the big trends now is instead of people retiring cold turkey they're doing phase retirements, and a lot of employers appreciate it because older folks show up on time. They're actually less likely to call in sick. You don't have to worry about them calling because their kids are sick, so I think there is going to be a change in terms of employers appreciating the fact that we have an older workforce.

Southwick: That's wishful thinking for us as we get older.

Brokamp: I think so. Well, think about our job. Like we have jobs related to financial services. The financial services industry is full of people who are working well beyond normal retirement age, and it's because it is a knowledge-based industry and you can keep doing it, because you're sitting at a desk.

Housel: A lot of that, too, are the scars from the financial crisis made it so that a lot of people who may have otherwise retired today, in 2019, say they need to work for another five or 10 years and postponing it because of that.

Brokamp: I often think about that when you see these things. For example, right now the ratio of worker to recipient for Social Security is something like 2.9 workers to every recipient, and by 2040 they expect that to be down to about two workers for every recipient. That assumes that all those people retire...

Housel: Stop working?

Brokamp: Yes, and we're already seeing the average retirement age go up to a point where I think in the next -- one, two, or three decades -- it will be well beyond 70 that people keep working. People will keep working because we're living longer and they're going to realize they don't want to just sit around the house for 30 years, but also people just haven't saved enough. They have to work longer.

Housel: Of course, it's funny to compare all this to the FIRE movement, the Financial Independence, Retire Early. It's like a barbell. You have people working until they're 80 and then people retiring when they're 35.

Brokamp: Right. We've had some of those folks on the show, and I think what we've established is a lot of those people are not really retired.

Housel: No, they're just working jobs that they want to.

Brokamp: Yes, and I think they're just going to be moving in and out of the workforce throughout their life in different ways.

Southwick: And the third one I have, which we've already touched on here. The third way that the aging workforce is going to hurt economic growth is, again, burdens on programs like Social Security. Medicare. I don't know how many times I've heard Bro...

Brokamp: Pensions.

Southwick: ... talk about how you won't get all of your Social Security, but you can still expect something.

Brokamp: Thank you! Thank you for listening!

Housel: And this is a topic that I think Bro knows more than you and I combined, Alison. My understanding for Social Security is that even to make a big fix -- to where you really get it sustainable over a long period of time -- does not necessarily require cutting the current benefits. It requires slowing the growth rate of future benefits.

The pessimists about Social Security -- even some people who think they're optimistic -- say that if the trust fund runs out of money, you'll still get 75% of your promised benefits, whatever the number is.

Brokamp: That's what it is, yes.

Housel: Even in a really bad-case scenario, I think most people, in real terms, will be getting something similar to what they are right now. They just won't grow in real terms over time adjusted for inflation.

Brokamp: You could solve Social Security's problem pretty quickly with just a few tweaks...

Housel: To the growth rate.

Brokamp: Yes. To that and you could even raise the retirement age. I mean, there's a combination of things that would be relatively painless. The bigger problems are Medicare and a lot of the state pensions, local government pensions, and city pensions. Those, oh, boy!

Housel: Correct me if I'm wrong, but a lot of those people are not eligible for Social Security.

Brokamp: Right. That's true!

Housel: They have a local pension and whatnot.

Brokamp: That's true!

Southwick: I didn't know that!

Brokamp: Yes, they don't participate. Which is good while you're working because you're like, "I don't have to contribute. I don't have to pay that 7.65%."

Housel: Right.

Brokamp: But then on the back end, you rely...

Housel: You don't get it.

Brokamp: You're relying on your pension from your state that is now way underfunded.

Housel: If you live in Illinois or something, that really...

Brokamp: And Detroit. A lot of those folks. Oh, man!

Southwick: So if the pension goes bust, you get nothing?

Brokamp: It depends.

Southwick: We haven't hit that point yet.

Brokamp: If it's offered by a government, you could get nothing, or you've just got to hope the taxpayers will bail you out. If it's a private corporation, there is a semiprivate governmental organization that insures them -- the PBGC -- but that, itself, is underfunded, and depending on how much you would get, you wouldn't get everything you're promised. It's pretty dicey.

Southwick: I'm literally asking for a friend. I have a friend who is going to retire on her local government pension. Is there a place you can go to see how safe and secure your local government pension is? Do you get statements? I know nothing about this.

Brokamp: You don't get statements, but you can find out how well funded they are. If it's a private pension, it has to file a Form 5500 with the Department of Labor. You can look those up. I don't know about government pensions, but that's all public information.

Southwick: I'm always impressed with Bro's ability to remember the numbers of forms. For like anything!

Housel: But here's the thing. He could have made that up and you and I wouldn't know.

Southwick: That's true.

Brokamp: That's true.

Southwick: Did you just make that up?

Housel: It's Form 21. Hike, hike, hike.

Brokamp: No, it is the 5500.

Southwick: It's a good form.

Housel: The bottom line is to save your money, kids.

Southwick: Right. Don't rely on...

Brokamp: Well, it's to save your money and have that little thought in your mind that nothing is guaranteed.

Housel: My parents recently started taking not Social Security but Medicare. They're postponing their Social Security a little bit longer. They said they always assumed during their working years that there would be nothing left. They'd get nothing. And it feels like a bonus to them, now. That's the proper way to set your expectations for retirement. Because when they were saving for retirement, they always assumed that Social Security would be zero. And now that they realize it's not zero, they're like, "Oh, this is great! This is amazing!"

Brokamp: Can I quote one of your articles?

Housel: No.

Brokamp: OK, good. So eventually, in another episode, we're going to talk about ways to be stupid. But you also wrote an article about ways to be smart, and it touched on this. It was basically having a barbell personality of on one side being very optimistic but on the other side having just a little bit of paranoia.

Housel: Paranoia, yes.

Brokamp: It reminded me of Andy Gross. Only the paranoid survive. There has to be a little bit of doubt. "You know what? I've just got to have some preparation for the worst-case scenario."

Housel: I frame it, too, as the difference between getting rich and staying rich. In getting rich, you need to swing for the fences, take a risk, go out and try something different. But staying rich requires a paranoia of conservatism and room for error. So having that barbell is really important.

Brokamp: To go back to your question, if you find out that your pension is only 80% funded, I think the smart way to factor that into your plan is assume you're only going to get 80% of your benefits. That's just one rule of thumb. And plenty of pensions are fully funded and you're OK. You just have to stay on top of it.

Southwick: Thank you for that little diversion for me asking for a friend. Let's move on to what the impact could be on the individual level. It's almost like a consumer, to some extent, because on the macro level there's going to be some bad results from having an aging workforce, but in my mind, I'm like, "Well, if there's less competition then maybe housing prices will come down for me personally and that's a good thing." That's what I'll need at the time.

But right now millennials and Gen Y are [thinking] they're never going to be able to afford a house. Well, maybe they will if there's less competition.

Housel: I think the best comparison to this is to look at what's happened in Japan for the last 30 years. In the last 30 years, Japan's working-age population has declined. They had a massive baby boom after World War II, and then their birth rate basically just stopped in the 60s. And their income has been way down in the last 30 years.

Brokamp: And they have virtually no immigration.

Housel: It's virtually zero, and that's had a big impact on their overall economic growth for the last 20 or 30 years. A big impact on their stock market, as well. But if you look at their overall GDP growth for the last 30 years, very low.

But, on the other hand, Japan has been, by and large, a pretty lovely place to live for the last 30 years. The reason why is because what matters to people on the ground, individuals, is not GDP growth, but GDP growth per person. And when your population declines, you don't need as much overall growth to split up in a smaller pie. That's why Japan, I think, has been a pretty decent place to live over the last 30 years. That could be the optimistic spin on this -- that going forward in the United States and other economies where the headline growth might be lower than it was before, but per-capita growth -- per-person growth -- might not be that bad.

And let's say, too, if living standards tripled in the 20th century and in the 21st century they only double; that's not a horrendous situation to think about. So even though we're talking about lower growth than we had in the past, it's not necessarily a big cause for pessimism.

Certainly relevant to this show and relevant to The Motley Fool is Japan's stock market over the last 30 years has been abysmal. A lot of that is because the stock market is driven by overall growth. [For the] people on the ground, who are just looking at their job situation and their house price, the per-capita growth is relevant to them; but for the overall stock market, that is driven by overall growth, and as that came to a halt in Japan, it's been pretty ugly.

Southwick: How is the retirement? Not that I expect you to be an expert on all things Japan, but how is the retirement situation going for all these people?

Housel: I know they're extremely strained, because their retired population is surging and the working population is plunging. I don't know the details on it, but I know they have some issues.

Brokamp: They have a more robust pension system than we do, but if you were trying to invest, their stock market has not done well and their bond yields are negative.

Housel: Negative. And also it's a very different culture. Not that I'm an expert on this either, but I think their culture is much more tilted toward children taking care of their elders in retirement in a way that is not culturally expected in the United States.

Brokamp: Yes. And of all the countries we talked about in the very beginning of the show, I looked at the average retirement ages of these countries. The information's a little hard to get because there's the age at which you're eligible to retire and then there's the age at which people actually do retire. It was kind of conflicting evidence, but Japan is one of those with a low age that is going to have to move up to around 62.

Some countries, like Russia, the average age for a man to retire is 60 and for a woman it's 55. The same with China, and they are mandating that that has to move up, because they can't have all these people retiring at what is really a very young age.

Housel: That's another part of all this. The retirement age has come up a little bit in the last four decades, but when Social Security came about, you would retire at 62 and on average die at 64. It was meant as more of a safety net rather than a proper pension.

Brokamp: Right.

Housel: Not only that, but the kind of jobs that you had back then were by and large physical jobs, so if you had been digging ditches for 30 years by the time you were 65, you were not only over it, but you maybe could not have done it anymore, and it's just very different with the average job today. So that's another factor that could change all of this -- you mentioned this earlier -- is if the average retirement age goes from 65 to 75, that changes a lot of the calculus.

Southwick: You talk about the possibility that we'll see the stock market impact and we're not going to see awesome gains in the stock market going forward. Do you have any general advice for investors on what to do? Are there industries to focus on? Personally, when I think about an aging population, I'm thinking I should invest in healthcare or something like that, but that's probably too simple of an answer.

Housel: Another big thing about this that's relevant for probably most people listening to this is a point made in this article. The United States stands out as the country that is head and shoulders better off than most other large, developed nations. So the forecast -- and again, it's just a forecast -- is that our working population will grow over the next 30 years. It will be by less than it did over the past 30 years, but it's still going to be growth vs. a 30% decline in China, Germany, Italy, and whatnot.

So I think for the United States and U.S. investors, this is a much less important topic than it would be if you had all of your portfolio in the Italian stock market.

Southwick: I do not!

Housel: Well, then, there you go!

Southwick: It's funny, because baby boomers are such a big topic in America. You think about the baby boomers dying out and it seems like it's going to be such a big deal, but you're telling me it's not really going to be that. I mean, on an individual level, we are all very sad that the baby boomers are dying out...

Brokamp: To all our baby boomer listeners.

Southwick: ...and we are going to miss you. Please. But on a whole...

Brokamp: They're still relatively young, by the way. It's not like they're all in their nineties.

Southwick: I mean, it's many years.

Housel: It's a big rate.

Brokamp: I think the last tail of it is just now getting into their 60s.

Housel: Yes.

Southwick: But it sounds like maybe I don't need to worry on a macro level about losing all of my best baby boomer friends.

Housel: Probably not.

Southwick: OK. [laughs]

Housel: But who knows?

Brokamp: But who knows? I was looking into birth rates, by the way. Birth rates usually go down during a recession and then recover afterwards, but that has not been the case since the Great Recession.

Housel: They came down and stayed down.

Brokamp: They just stayed down. Last year they announced it was the lowest birth rate in America's history -- like 62 births per 1,000.

Housel: And it's still to be determined whether that's a permanent decline or if it's just millennials are postponing birth to a much later degree than the baby boomers did. So the baby boomers would, on average, have their first kid at 24. With millennials it's 32. Particularly college-educated white women. It's like 35.

Brokamp: Working on their school loans. They've got to pay those off.

Housel: Right, exactly!

Brokamp: I found an interesting article. It found that birth rates were a good predictor of recessions, because the fertility rate actually starts dropping before the recession happens...

Southwick: A little leading indicator.

Brokamp: Yes, it's a good leading indicator.

Southwick: That's funny! That also reminds me of another point that could be a good thing. The underemployed will have a better chance for jobs and advancement when the labor pool gets smaller.

Housel: Yes.

Brokamp: Right.

Southwick: That's another yaaay...

Housel: You're always looking for the silver lining.

Southwick: We're looking for the silver lining. There you go!

Brokamp: Not to mention the fact that the planet hit 2 billion people in the 1920s and we're already up to almost 8 billion now. We're doubling like every 40 to 60 years depending on which period you look at. At some point, the planet won't be able to sustain that many people.

Southwick: Yes, I've seen the movies. That's when we hop on spaceships...

Housel: We just rely on Elon Musk taking us to Mars. He's going to figure it all out.

Southwick: He's playing the long game. He's got it.

Housel: Mars is lovely!

Southwick: It's so lovely this time of year!

Housel: You've got to wear sunscreen, but you'll be fine!

Southwick: Oh, hopefully I'm dead by then. Morgan, thank you so much for coming in today and talking to us about this! I feel much better about the world.

Housel: Then my work here is done!

Southwick: Awesome!

Housel: Thank you!


Southwick: That's the show! I want to thank Morgan Housel, once again, for coming in. He's a partner at the Collaborative Fund, but that also means that he writes for the Collaborative Fund. Morgan is a great writer, so go to the Collaborative Fund's website and read more from Morgan. If you want us to read something you've written, send us an email. Our email is [email protected]. We'd love your feedback and, of course, send us your questions, and if we can, we will tackle them on a future Mailbag episode. You can also follow us on Twitter.

Housel: Sure!

Southwick: I don't know. I never sell that one for a good reason. All right. The show is edited eloquently by Rick Engdahl. For Robert Brokamp, I'm Alison Southwick. Stay Foolish, everybody!