Population Aging and Its Impact on the Country's Economy

Abstract

ObjectiveThe present article raised the pressing issue of population aging in Russia and investigated the challenges this phenomenon poses to the social security system. As modern studies show, this challenge is typical for both developing and developed countries. The paper intended to propose ways of reforming the pension system of the Russian Federation to ensure its independence from the state budget.MethodsThe provided suggestions were based on the analysis of the current demographic problems in Russia, review of the dynamics of its population age composition, consideration of the most popular strategies for reforming pension systems in developed countries, and the specific features of the Russian labor market.ResultsCurrently, for Russian Federation, the population over the working age grew by 11.6%, and number of the working‐age people and those under the working‐age decreased by 9.3% and 5.6%, respectively. The inverse dependency ratio ranged from 2.2 to 1.7 in 2019 to the level of 1.78 for 10 years. As a result, it was noted that ignoring the issue of population aging can lead to a decrease in state budget stability and adversely impact the country's economic prosperity.ConclusionThe novelty of the research lies in selection of the main problems of reforming country budgets in connection with the increase in the number of elderly people and changes in the dynamics of pension contributions in connection with the growing expectations of the population. Among other things, the article also highlighted the presence of additional difficulties that may accompany the implementation of the proposed measures.