September 12, 2007 / 1:14 AM / 12 years ago

FACTBOX-Ageing Japan: Key facts on the population trend

(Reuters) - Japan has the world’s highest percentage of elderly people and its population is greying faster than any other country, posing risks to the economy’s growth prospects and straining government finances.

By 2055, two out of five Japanese are expected to be 65 or older, double the current figure, the Japanese government estimates.

The following is an overview of ageing Japan:

SHRINKING POPULATION

*By 2055, the nation’s population is expected to fall by 30 percent to less than 90 million, after peaking near 128 million in 2005. The population stood at 127.05 million as of end-March, down for the second year in a row.

*Japan’s fertility rate — the average number of children a woman bears in her lifetime — was estimated at 1.32 as of end-2006, below the level of around 2.07 needed to keep a population from falling.

*Japan’s post-World War Two baby boomers — those born between 1947 and 1949 — start hitting the standard retirement age of 60 this year.

*About 1 million of the baby boomers will turn 65 every year between 2012 and 2014, adding to the burden on the working population whose taxes pay retirement pensions.

RISKS TO ECONOMY

*The government worries that greying population may drag on Japan’s economic growth in the future, as it would leave fewer workers and a smaller stockpile of capital because of dwindling savings. That could mean Japan would have to accept more workers and direct investment from abroad.

*Japan’s household savings rate fell to 3 percent in 2005 from a peak of above 20 percent in the mid-1970s when Japan boasted the world’s highest savings rate. The pace of decline has been much faster than the government had predicted.

*The government estimates that Japan’s labor force could shrink to about 56 million in 2030 from 66.6 million in 2006, unless the labor participation rate picks up among women, the elderly, the young and foreigners.

SOCIAL SECURITY BURDENS

*Japan’s pension system is already faltering under a ballooning number of pensioners.

*There were 3.3 workers aged between 15 and 64 supporting each person 65 or over as of 2005, but that proportion will be down to 1.3 workers for each elderly person in 2055.

*Social security benefits, which include pensions and medical expenses for the elderly, are expected to cost the government 141 trillion yen ($1.2 trillion) in fiscal 2025/26, compared with 85.6 trillion in fiscal 2004/05.

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