Salient to Investors:
BlackRock said rising life expectancy is pressuring the elderly to seek higher investment returns, trumping the past wisdom of moving into fixed income which was valid when life expectancy was much lower. High-quality bonds yield almost nil because of risk-aversion, so won’t make savings last longer after retirement – e.g. German 2-year government bonds yields fell below zero in early July.
US Census estimates Europeans over 65 will rise to 19 percent of the population in 2020 from 16.6 percent in 2012. Japan’s ratio is 23.9 percent for 2012. The IMF estimates global life expectancy rose from 48 years in 1950 to almost 70 years in 2010.