Profit From the Longer Life Spans, Part 1

We all know that the life expectancy for older Americans has continued to climb, given advances in medicine and the move toward a healthier lifestyle -- and this was just confirmed by the National Center for Health Statistics (NCHS). According to a new NCHS report released this month, in 2012 -- the most recent year for which data are available -- people who reached age 65 could look ahead to an average additional 19.3 years on the planet. Female readers will like that they tend to average another 20.5 years, while we fellas tend to average another 17.9 years. Those 19-plus years constitute a 34% increase from 1960, when a 65-year-old could expect to live another 14.4 years. As you would expect, much of that 34% increase can be attributed to reductions in death rates from such major ailments as heart disease, cancer, stroke and chronic lower respiratory diseases. Despite those advancements, though, roughly 74% of all deaths in the U.S. were due to those causes and to unintentional injuries; Alzheimer's disease; diabetes; influenza and pneumonia; and kidney disease. So we as a population are living longer. But are more of us living longer lives and, if so, what can we conclude from this? Exiting 2009, the latest year for which the data is available, persons 65 years or older numbered 39.6 million -- roughly 13% of the U.S. population, or one in every eight Americans -- according to the Administration on Aging (yes, there is such an institution, and it can be found here). By 2030, the AOA estimates there will be about 72.1 million older persons, more than twice the number seen in 2000. If we take the long view, we find the percentage of Americans aged 65 and older has more than tripled since 1900 -- from 4.1% back then to 12.9% in 2009. Moreover, the data make it clear that we aren't merely seeing more people reaching 65 and older, but that the population cohort itself is also living longer. In 2008, the 65-to-74 age group, comprising 20.8 million people, was 9.5 times larger than it was in 1900. The 75-to-84 group had 13.1 million people, 17 times more, and the 85-plus group, at 5.6 million folks, was 46 times larger. As a result of increasing longevity and the decline in the number of babies being born each year, the domestic population is skewing older. As we head further into 2014, that pace is going to accelerate as the Baby Boomer generation -- those born between Jan. 1, 1946 and Dec. 31, 1964 -- pass into 65-plus category. It all started a few years ago, in January 2011, when more than 10,000 Boomers began reaching 65 on a daily basis. That will continue every single day for the next 15 years, and in sum roughly 70 million will be added to the 65-plus category. When we think about a growing addressable market, the above statistics certainly fit the bill -- and there are a number of ways to invest in this trend. One is broad-based health-care companies that are also dividend payers, such as Johnson & Johnson (JNJ), Novartis (NVS) and Pfizer (PFE) to Merck (MRK), Bristol-Myers (BMY) and GlaxoSmithKline (GSK). Now, if you happen to be in the aged cohort, GSK and AstraZeneca (AZN) likely jump to the top of your list, given their respective favorable dividend yields of 5.8% and 4%. Another strategy -- more of a bullets-to-guns approach, which I tend to favor -- involves companies that serve the medical industry. Examples include dental and medical companies Henry Schein (HSIC), McKesson (MCK), Zimmer (ZMH) and Dentsply (XRAY). The Thematic Growth Portfolio that I manage already has a position in Dentsply shares, but I'm considering several of the above names for increasing my exposure to this secular trend. As you'll see in part 2 tomorrow, this aging population is more than just something the U.S. has to contend with -- and that brings additional investing opportunities.

Profit From the Longer Life Spans, Part 1

Americans are living much longer these days -- and there are a number of ways to invest.

Columnist Conversation

Updated Charts JPM and C

SARS, Ebola, Coronavirus and Markets

Latest Updates on Kobe Bryant Tragedy From TheStreet and Sports Illustrated

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.