Page 9 - Elderly care and housing demand in the EU

Ranking 2: Income potential

2.2 Austrians and French have highest income potential

Disposable income is an important aspect of elderly continue to grow over the next decade in all eleven Eastern European incomes are low, but rising sharply
spending power, which determines to what extent countries. In addition to economic progress, the cohort In 2017, median incomes of Czech, Polish and
seniors can afford care and housing services. effect is an additional source of growth: from 2007 to Romanian elderly people exceeded just a quarter of
’17 younger seniors had higher incomes than older Western European incomes on average. Nevertheless,
Elderly income will continue to grow seniors. elderly in the three CEE countries all experience
The average income of the over-65s in 2017 (who will Lastly, we make a correction for fiscal deficits that relatively large, continuing income improvements.
be the over-75s of 2030) forms the starting point for our potentially weigh on private income growth due to
estimate of elderly income in 2030. Based on baseline probable government cuts or tax raises in the near Austria and France at top of income ranking
nominal GDP projections as a proxy for income growth, future. For instance, for Italy to achieve the government The resulting list of elderly income potential can be
the income of the 75+ elderly population is expected to debt-to-GDP ratio target of 60% by 2033, it is necessary divided in three sub-divisions: the ‘Northwestern’ EU-
to make a cumulative budgetary consolidation effort of countries lead the pack, with Austria and France at the
Eastern European elderly incomes rise the fastest 9.4 percentage points of GDP over the 2021-2025 top. They are followed at a distance by Italy and Spain.
Estimated median disposable income of 75+ households in 2030, based period (or almost 2 pps. per year; see table). The three CEE countries are at the bottom end.
on 65+ income in 2017, long-term GDP-projections and medium-term
fiscal sustainability
Realised 65+ Nom. GDP growth Fiscal Estimated Estimated elderly income growth surges EU-wide Austrian elderly have highest income potential
incomes in per cap. sustainability 75+ incomes in Realised (2007, 2017) and estimated (2030F) median Ranking 2: Income potential, based on estimated median
2017* proj. 2017-’30** ind. (S1)*** 2030
(a) (b) (c) a x (1+b) x (1-c) disposable incomes per year for 75+ households*, in EUR disposable incomes per year for 75+ households in 2030
Aus 24,101 52% -0.8% 36,922 40000
Fra 23,079 53% 4.2% 33,762 35000
Net 19,834 63% -1.7% 32,963
30000
Ger 19,267 56% -2.0% 30,717 Relatively high
UK 18,969 53% 1.3% 28,635 25000 > €25,000 3
Bel 18,826 53% 4.3% 27,534 20000 Medium 5 6 4 10
Ita 16,741 45% 9.4% 22,044 15000 €15,000 - €25,000 9
Spa 13,972 59% 5.2% 21,121 10000 Relatively low 1
Cze 6,728 87% -2.9% 12,917 < €15,000 2 11
Pol 5,617 105% -0.7% 11,603 5000 7
Rom^ 2,628 142% 1.5% 6,269 0
Aus Fra Net Ger UK Bel Ita Spa Cze Pol Rom^
Source: Eurostat, OECD, IMF, EC, calculations by ING Economics 8
*Median equivalised net income of elderly households, in euro’s 2007 2017 2030F
**OECD baseline projections of gross domestic product per capita,
***EC medium-term fiscal sustainability indicator (S1) Source: Eurostat, OECD, IMF, EC, calculations by ING Economics
^ING calculation based on IMF until 2024 and extrapolation for 2025-’30
*Median equivalised net income of elderly households, in euro’s Source: Eurostat, OECD, IMF, EC, calculations by ING Economics
ING Economics Department 9 Elderly care and housing demand in the EU – May 2019