Joseph Coughlin, head of the Age Lab at MIT, sees opportunities for growth and innovation as the senior population swells. By Megan Leonhardt

About 20% of America's population will be over 65 in just five years. The economic ramifications of this so-called age wave potentially include tighter labor conditions, increased healthcare needs, and high costs for social programs. For these and other reasons, an aging population could make economic expansion more difficult in the coming decades.

Yet, Joseph Coughlin, founder and director of the MIT Age Lab, sees opportunities for innovation and growth. Coughlin leads a team focused on multidisciplinary research into the changing behaviors of older Americans and ways to improve quality of life. His recent book, Longevity Hubs: Regional Innovation for Global Aging, delves into innovation hot spots for the world's aging population that could offer a blueprint for overcoming the economic and societal threats.

Barron's recently talked with Coughlin about the longevity economy, workforce trends, innovative companies, and various ways that businesses and investors can capitalize on a growing senior population. An edited version of the conversation follows.

Barron's: Stocks are down this year, partly because of investors' concerns about the potential impact of the Trump administration's tariffs. What does the market selloff mean for older Americans?

Joseph Coughlin: Those of us currently in the decade before retirement are realizing that we may not only be pushing out our retirement plans, but joining our millennial and Generation Z kids in the idea that a side hustle is no longer an extra gig; it is a necessary new normal for both additional income and to hedge against uncertainty in retirement.

Retirement is going to include more work for the next cohort of retirees than any previous generation. This is due not just to income uncertainty for what might be called the 401(k) generation, but uncertainty in general, and unplanned and hidden expenses for things such as health, home maintenance, and the need for home care to substitute for the support once provided by family. Plus, there is the uncertainty of how long we are going to live.

How will an older population change the U.S. economy? What changes aren't we talking about enough?

The disruptive demographics of global aging and the buying power of the longevity economy are among the few clearly evident trends that will reshape markets, the workforce, and innovation. We now have an unprecedented number of older people reaching retirement age. We have always had older people, and we have always had retirees, but the generation retiring now requires us to write a new narrative.

I see two sides to the longevity economy. First, there is what I call the "push" side -- new businesses and services that "support" an aging society. Investment analysts and investors look at old age through a traditional lens, typically equating their grandparents with a market the size of the third-largest economy in the world. Think senior housing, medical devices, pharma, basic healthcare. This is the old, antiquated view of the older consumer -- a view that says older consumers are either on crutches or cruises. It is built on limited assumptions about aging consumers.

The real opportunity -- and what gets me excited -- is the "pull" side, where dynamic older consumers are demanding innovation to match their ambition. Older consumers are often described as not willing to try anything new, or frozen in time. Perhaps companies have just failed to excite and delight the older consumer who has money but hasn't seen anything new, let alone exciting.

Which companies are getting it right?

No one would suggest that [privately held] Dyson, the home-appliance company, makes older people's products, but the ease of use, light weight, and variety of colors make the brand's offerings attractive to older and younger buyers. Likewise, the slide-on shoe market -- Nike and Skechers are leaders -- makes convenient products for the young parent on the go, and the grandparent who is now less physically flexible.

Apple has managed to provide clean and intuitive devices, not interfaces littered with large, ugly buttons. Viking Holdings offers more than a cruise; it addresses the aspirations of consumers to continue learning and having fun across the life course.

Are you optimistic that older Americans will be able to remain in the workforce longer? That hasn't always been the case.

Those of us who make our money at a keyboard and the like will probably be able to continue working, although maybe not in the same profession. Retirement was made for people who [do physical] work. I'm talking about truck drivers, iron workers, service workers, those who stand on their feet for nine, 10, 12 hours a day.

Old age requires a new story and a systems approach to think about those who can no longer work because, frankly, their bodies gave out, and those who aren't working because the system doesn't want them.

A public-private partnership policy might be the best approach [to helping people working longer]. This is about transforming the narrative of work, as much as the physical workplace. The government can act as an agenda setter and policymaker, first by protecting the rights of those who need to retire.

And second?

Second, by helping the education system to develop and recognize further innovations such as microcredentialing, making education and professional changes over a lifetime the norm, not the outlier.

Third, the government could support a redesign of the workplace -- and most anyplace -- to be not simply age-friendly, but age-ready. We know we are an aging society. The government can provide tax incentives and promote best practices. The private sector can step in with the increased flexibility needed by many older workers who are also caregivers, and add support for redesigned workspaces for bodies experiencing changes in vision, flexibility, strength, and endurance.

There's also an opportunity for employers to invest in robotics and co-botics not just for efficiency, but to reduce strain, fatigue, and injury, improving the workplace for every age worker.

But many people can find things to do. The gig economy isn't just for kids anymore. We find a lot of people, especially younger retirees, opening up an Airbnb or driving for Uber. I'm talking about the idea of maybe not working full time, but taking a step back, maybe taking on part-time or classic gig work where people get paid less for more freedom, more flexibility.

There has been a lot of discussion in recent years about the potential personal and economic benefits of aging in place. Is this feasible for most people?

I always like to ask people, as a longevity planning question, do you have someone who is going to change your lightbulbs? Or better, yet, how are you going to get around? Nearly 70% of those over the age of 50 live in suburban and rural areas. There aren't many buses or subway systems out in suburbia.

But there is hope. A lot of people discovered apps during the pandemic, and that can be like virtual assisted living. For example, as Uber and Lyft become more available, suddenly the suburbs maybe aren't as far as they once were. Get a meal delivered when you need it. So, I am cautiously optimistic that aging in place is possible. It is going to be driven largely by innovation and businesses that understand there is a real market out there, powered by the passion of people wanting to remain in their home.

How has the possibility of extended longevity -- say, living past 100 -- affected the ways Americans think about the trajectory of their lives and retirement years?

As we live longer, the focus isn't only on what people in retirement are going to do. What we are finding with longer life spans is that younger people are extending life stages that used to be shorter, or inventing new life stages. That changes everything from homebuying to finding a partner and accumulating wealth. It's kind of a longevity ripple. We have been focused on the older retiree, but that assessment is incomplete.

We need to look at what a 100-year life span does to our expectations and behaviors, and probably most important, how government and business are going to innovate around disruptive demographics that don't fit the story line that has been in place for the past century.

What is the likely economic impact of a shift in mind-set around longevity?

The two biggest economic effects are likely delayed wealth accumulation and fertility. The U.S. birthrate is growing only among women over the age of 35, particularly among those over the age of 40. And, by the way, you need 2.1 children per female just to keep population growth even. [The U.S. fertility rate hit the lowest level on record last year, falling to 1.62 births per woman.]

The net impact of our aging population could be slower economic growth, as more people leave the workforce and require more care. How can the U.S. combat this?

I like to say that economics is two parts math and one part witchcraft, while technology forecasting is two parts prayer and one part engineering. But demography is destiny, and the disruptive demographics of an aging world require a systems approach. Immigration is part of that system.

Yet, we can't just count bodies as workforce replacements. They have to be bodies that are either trained for what we need or who can access an infrastructure of education and socialization that turns raw numbers into refined talent.

How can investors capitalize on some of the trends that an aging population will spur?

This is an incredible, unprecedented investment opportunity. The next generation of older people believes there is a pill, a product, or a policy that isn't just going to help them live longer, but live better. The investment opportunity is targeting companies on the leading edge of innovation.

The code words to look for regarding this new investment opportunity in the longevity economy are things like "easy," "convenient," "wellness," and "performance." What's nice about these words is that they appeal to all ages. But as you get older, these words become more critical.

And let's not forget about the "F" word -- fun. Beyond playing pickleball, today's older adults want to feel good, look fashionable, and live fully. This demands innovation in everything from adaptive fashion tech to immersive travel experiences to social platforms designed for mature users without signaling the offerings are for "old" people. The opportunities extend into luxury markets, wellness tech, and what I call ageless retail -- brands that understand style and vitality have no expiration date.

A big investment opportunity in these areas is also women. Within the aging population, the catalysts of innovation, the chief consumer officers, are women. They live longer, and are the primary caregivers and most trusted advisors to younger people. And they buy almost everything you can imagine.

The future isn't just about living longer -- it is about living better. This gap between traditional aging and modern aspirations creates a white space ripe for investment and innovation. For investors who understand this shift, the longevity economy offers something rare: a massive, predictable trend that is still fundamentally misunderstood by the market.

Thanks, Joe.

Write to Megan Leonhardt at megan.leonhardt@barrons.com

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