Approaching High Tide

So here’s a nifty term I learned this week: “Dependency Ratio.”

This term appears in this month’s U.S. Census Report entitled The Baby Boom Cohort in the United States: 2012 to 2060, and it measures the youngest and oldest members of the population relative to the number of those of working age. The smaller the dependency ratio the better. Or, turning the equation the other way around, the larger the dependency ratio, the worse it is for the economy.

And why?

Because workers work – and workers earn. Dependents, on the other hand, depend on earners. That’s why they’re called “dependents.”

And who are these dependents? They are both the young and the old – those who have not yet entered the workforce, and those who have retired from it. In fact, the dependency ratio is split into two segments, the “youth dependency ratio” and the “old-age dependency ratio.”

According to the U.S. Census Bureau, the youth dependency ratio topped out in 1964, when there were 67 children for every 100 working adults. By 1999, when boomers were in their peak earning years, the dependency ratio was under 37, its all-time low.

The Rising Tide

Old-age dependency ratios are also a function of the baby boom. In 1945 there were 12 older Americans for every 100 workers; by 2010 there were 21. By 2030 the combined dependency ratio will hit high tide, when it is projected to top 75.

Need I say it? That’s a lot of dependents.

And here’s the thing about dependency: in 15 years, 15-year-olds will be 30. With any luck at all they will be working, living on their own, furnishing their own homes or apartments, and entering their peak purchasing years. They will also be healthy.

Contrast this with 65-year-olds. In 15 years they will be 80. Typical 80-year-olds are not working, not buying new homes, and not buying new goods at the pace they once did. Furthermore, few 80-year-olds are healthier than they were a decade and a half earlier.

By 2030, the last of the baby boom cohort will have turned 65. In that same year 1 in 5 Americans will be 65 or older. An historically large old-age ratio will increase old-age dependency – and is likely to squeeze government agencies and families alike as they attempt to meet the needs of the elderly.

We’re all making this up as we go: never before have we or our parents, never before has the nation, or indeed the world, faced this dynamic. It’s going to take creative solutions, combined efforts, and flexible options to meet the needs of those we love.


Laurie MacNaughton is a freelance writer and a Reverse Mortgage Consultant at Middleburg Mortgage. She can be reached at: 703-477-1183 Direct or


Laurie MacNaughton [NMLS# 506562] ∙ Reverse Mortgage Consultant, President’s Club ∙ Middleburg Mortgage ∙ 8190 Stonewall Shops Square ∙ Gainesville, VA 20155 ∙ 703-477-1183 Direct ∙

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