Rapid Population Aging in Latin America

Aging population has long been understood as a phenomenon associated with wealthy economies,  a challenge faced by societies that experienced decades of prosperity and strong social protection  systems. We tend to think of cases such as Japan, the Nordic countries, or Western Europe.  However, the fastest demographic transition toward aging in the world is now taking place in Latin America, where the older population is growing more quickly than the region’s economic capacity  to support it. It is an aging process that arrives before high income levels are achieved, and for that  reason, it is fundamentally different.  

Latin America and the Caribbean will experience a faster rate of population aging than  today’s high-income countries did during their own demographic transitions. According to  UNDP (2024), Latin America’s life expectancy rose from 49 years in 1950 to 76 years in 2025,  while fertility rates fell sharply from 5.79 births per woman to 1.78 over the same period. Together,  these trends are driving a rapid increase in the share of the population aged 65 and the most recent estimates from UNDP (2024), the share of the population aged 65 and older.  

Following  over in Latin America is projected to reach 10 percent in 2025 and 20 percent by 2053, a 28-year  window. In contrast, the same demographic shift took 55 years in Europe, where the population  aged 65+ increased from 10 percent in 1968 to 20 percent in 2023. Aranco (2022) further notes  that long-term projections indicate that by 2091 both Latin America and the Caribbean and Europe  will be the only regions in the world where more than 30 percent of the population will be 65 or  older.  

Latin America will face the effects of population aging before achieving higher economic  development. The end of the demographic dividend plays a central role in this process. Estimates from Alaimo et al. (2015) indicate that nearly 60 percent of the region’s economic growth between  2000 and 2015 resulted from an expanding working-age population rather than productivity  increases. This favorable demographic structure is now shifting. According to UNDP projections,  the working-age share will stabilize during the 2020s and begin to decline thereafter, while adults  aged 65 and over will become the only age group that grows in relative terms.  

This demographic shift has important economic implications. As highlighted by Natalia Aranco et  al. (2022), Latin America is set to reach key aging thresholds such as having 20 percent of its  population aged 65+ at substantially lower income levels than today’s high-income countries. Her  estimates, based on GDP per capita in constant 2015 USD and an assumed annual growth rate of  3 percent, suggest that the region will cross this threshold with less than half the income level that  high-income countries had when they experienced the same transition. Although the specific  numbers depend on growth assumptions, the broader conclusion remains robust across different  data sources¹: Latin America is aging faster and at earlier stages of development than the regions  that aged before it.  

The Impact of Informal Employment on Pension Coverage

 Informality is the main obstacle to the financing and coverage of contributory pension  systems, a problem that is exacerbated by the growth of the elderly population. Labor  informality is a big challenge in Latin America, and its prevalence is different across different age  groups. According to an ILO² report, one in two (49.6%) workers are in an informal job and this  figure varies in different age groups. Young and elderly workers are more likely to have an informal job. While informality rates for workers aged 25-35, it begins to increase significantly  with age. (OCDE, 2024). This pattern severely undermines workers’ ability to contribute  consistently to public or private pension systems, resulting in low contribution and limited access  to adequate pensions in old age. Consequently, many older adults remain in the labor market  beyond traditional retirement ages to compensate for insufficient or nonexistent pension income,  a trend that is notably higher in Latin America and the Caribbean than in OECD countries, 29.6%  to 11.3%. (Alvarez et al., CAF, 2021).  

Labor informality during the workers’ lifetime is a big determinant of improper coverage  and weak pension systems in the region. The pension systems are heterogeneous between LAC  countries, as Altamirano et al. note, the region operates a mix of Defined Benefit (DB) systems,  similar to the U.S. Social Security, and Defined Contribution (DC) systems, comparable to 401(k)- type plans, often combined into mixed schemes. Because informal workers experience unstable  employment and intermittent contribution histories, they frequently fail to meet minimum contribution requirements in DB systems or accumulate insufficient savings in DC systems,  resulting in pensions that are often below the poverty line. In practice, this makes pension systems  regressive, as workers with stable, formal jobs secure adequate protection, while low-income and  informal workers reach old age with little or no pension benefits.  

To address this issue, many LAC countries have expanded Non-Contributory Pension (NCP)  programs, which provide direct public transfers to older adults excluded from traditional pension  schemes. The share of older adults receiving any pension has increased significantly due to the  growth of these programs, and in some countries, coverage is nearly universal. A notable example  of the use of NCPs is the Renta Dignidad program in Bolivia, which achieved 97.2% of coverage.  (Aranco et al, 2022, 3.2). These schemes are funded by the general tax revenues rather than payroll contributions, paired with rapid growth of the aging population suggest an increase in this social  expenditure as a percentage of GDP. This could be improved by appropriate targeting systems of  effective cash transfers instead of the universalistic approach.  

Population aging is placing increasing pressure on public health systems in Latin America. Rapid demographic aging has expanded the need for long-term care: approximately 8 million older  adults currently require assistance with activities of daily living, and two-thirds of them are women.  Projections indicate that this number will triple in the coming decades, driven both by the rapid  increase in the older population and by a rising prevalence of functional dependence (Stampini et  al., 2025). This trend underscores the urgent need for integrated long-term care policies and  infrastructure, which remain undeveloped in the region.  

Health systems in Latin America face severe fragmentation and unequal access. In most countries,  two subsystems coexist: the contributory subsystem, which serves formal workers, their families,  and pensioners and is financed through mandatory payroll contributions; and the non-contributory  or universal subsystem, which is heavily subsidized and covers informal workers, the unemployed,  and low-income populations (CAF, 2020). This dual structure generates persistent inequality in  access to services and limits the capacity to respond effectively to the needs of an aging population.  

Latin American health systems are also structurally unprepared for the chronic conditions that now dominate the region’s epidemiological profile. Historically oriented toward curative  care, infectious diseases, and maternal and child health, they struggle to adapt to the prevention  and long-term management of chronic illnesses, which have accounted for more than 80% of  deaths and poor health among older adults since the 1990s (Aranco et al., 2022). This challenge is  intensified in fragmented systems where quality and accessibility depend on the type of affiliation.  Comparative evidence shows significant differences in the detection and treatment of hypertension, cervical cancer screening, and mammography between contributory and non-contributory  subsystems. According to Bancalari et al. (2023), a substantial portion of these gaps remains  unexplained after controlling for education, income, and other sociodemographic factors,  suggesting that they may reflect differences in service quality and accessibility.³ 

Long-term care in Latin America relies overwhelmingly on unpaid family caregivers, a  model that is rapidly becoming socially and economically unsustainable. According to  Stampini et al. (2025), approximately 60% of caregivers for older adults with functional  dependence are women, a share that rises to 76% in Colombia and nearly 99% in Mexico. This  burden carries measurable costs: female caregivers are 8 percentage points less likely to be  employed, have lower incomes, and accumulate fewer pension contributions. With shrinking  family sizes and rising female labor force participation, this model is increasingly untenable.  Maintaining the current ratio of caregivers to older adults would require more than 60 million  family caregivers by 2050, more than double the number available today.  

Latin America is aging faster than it is developing, and this simple fact explains much of the  pressure the region will face in the coming decades. The demographic transition is advancing at a  speed that outpaces the capacity of labor markets, pension systems, and health systems to adjust. High informality weakens contributory pensions and pushes millions of older adults into non contributory programs, which are essential but create long-term fiscal pressures. At the same time,  health systems built for a different epidemiological profile are struggling with chronic disease,  functional dependence, and the growing demand for long-term care. Much of this burden ends up  falling on families, especially on women.  

In the end, the picture that emerges is consistent: the region is entering an older phase of its history  without the institutional foundations that aging requires. This does not mean collapse, but it does  mean that delaying adaptation will make the adjustment harder and more expensive. Understanding the speed and structure of this transition is the first step toward responding to it in  a realistic way. 

[1] IMF and World Bank GDP data aggregates differ comparably in methodology and growth projections, none of them beyond 5 years.

[2] International labor organization

[3] P. 141

Works Cited 

United Nations, Department of Economic and Social Affairs, Population Division (2024). World  Population Prospects: The 2024 Revision, custom data acquired via website. Link to source  

Aranco, Natalia, Mariano Bosch, Marco Stampini, Oliver Azuara Herrera, Laura Goyeneche, Pablo  Ibarrarán, Déborah Oliveira, Maria Reyes Retana Torre, William D. Savedoff, and Eric Torres Ramirez  2022. Aging in Latin America and the Caribbean: social protection and quality of life of older  persons. https://doi.org/10.18235/0004287  

Alaimo, Veronica, Mariano Bosch, David S. Kaplan, Carmen Pagés, and Laura Ripani 2015. Jobs for  Growth. https://doi.org/10.18235/0000139 

International Labour Organization (ILO). Strategy for the Promotion of Formalization in Latin America  and the Caribbean 2024-2030 (FORLAC 2.0). Lima: International Labour Office, 2024.  https://www.ilo.org/publications/strategy-promotion-formalization-latin-america-and-caribbean-2024- 2030 

OECD/OISS (2024), Informality and Households’ Vulnerabilities in Latin America: Data, Insights and  Implications for Labour Formalization Policies, OECD Publishing,  

Paris, https://doi.org/10.1787/e29d9f34-en.  

Álvarez, F., Brassiolo a, P., Toledo, M., Allub, L., Alves, G., de la Mata, D., … Daude, C. (2021).  Pension and healthcare systems in Latin America: Challenges posed by aging, technological change, and  informality (report). Caracas: CAF. Retrieved from https://scioteca.caf.com/handle/123456789/1730  

Alvaro Altamirano, María Laura Oliveri, Mariano Bosch, Waldo Tapia, Calculating the redistributive  impact of pension systems in Latin America and the Caribbean, Oxford Open Economics, Volume 4,  Issue Supplement_1, 2025, Pages i510–i533, https://doi.org/10.1093/ooec/odae030 

Stampini, M., Llena-Nozal, A., Soto Iguarán, C. ., Aranco, N., Benedetti, F., Fabiani, B., Garcia Diaz,  M. ., Killmeier, K. ., Lupica, C., & Rauet Tejeda, J. . (2025). Who Cares? How to Support and Ensure  Recognition for Caregivers for Older People in Latin America and the Caribbean.  https://doi.org/10.18235/0013724 

Bancalari, A., Berlinski, S., Buitrago, G., García, M. F., Mata, D. d. l., & Vera-Hernández, M. (2023).  Health Systems and Health Inequalities in Latin America. https://doi.org/10.18235/0005243