Demographic change costs money. By 2040, the state coffers of some federal states in Germany will be groaning as the “baby boomers” retire. Our graphic shows how expensive the demographic costs are for your state.

Germany is aging. The demographic change in the country is progressing – and for some federal states it will be really expensive. This is the result of a recent study commissioned by the insurance industry. Bavaria, Baden-Württemberg and North Rhine-Westphalia are those most affected by the demographic costs. Here, the retirement of the baby boomers, who by definition were born between 1955 and 1970, will tear gaps in the national budgets worth billions.

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Elsewhere, for example in Mecklenburg-Western Pomerania, Saxony or Saxony-Anhalt, age-related expenditure exceeds income somewhat less than in the south of the republic. According to the study, the additional expenditure there remains relatively low. However, no federal state will be completely spared from losses in the long term, the forecast shows.

The city-states of Hamburg and Berlin alone will lag behind with a plus by 2040. “They benefit from their relatively young population,” summarizes study author Fanny Kluge. “Even in the countries that are already tending to be overaged, the budgetary impact is limited.”

Our graphic shows how strong the effects of demographic change in Germany are on the budgets of the federal states:

The demographic development behaves differently depending on the region. Factors such as the labor market situation or childcare options are just two of many different influences. For example, if there are no jobs or if they are better paid elsewhere, young people are more likely to emigrate rather than stay – a phenomenon that the eastern German states in particular were confronted with in the 1990s. Younger people are then usually drawn to the big cities, which in turn benefit from such migration movements. The average age in the federal states differs enormously in some cases:

These different age structures also have an impact on public finances. More revenue is collected when the proportion of the population of working age is higher. Most of the revenue here is generated through taxes on income, consumption and capital. Because: For the youngest and also the oldest, the federal states and municipalities have to spend more money than they get in, for example for education or spending in the social sector. The more “boomers” retire in the federal states in the coming years, the more expensive it will be for the states.

“The demographic and economic development are partly dependent on each other,” says Andreas Edel, head of the demographic network Population Europe. “We therefore have to deal with the question of how we can break the vicious circle of aging population and shrinking financial resources.”

On the one hand, the proportion of the population aged 20 to 66 will shrink from 62.2 percent in 2020 to 55.8 percent in 2040, while on the other hand, the proportion of people over 67 will increase from 19.5 percent to 26 percent in the same period to. This is shown by forecasts by the Federal Statistical Office.

For this reason, demographer Fanny Kluge proposes a new funding instrument for aging and structurally weak regions in East and West in the book “Aging Society” (published by the Demography Network Population Europe and the General Association of the German Insurance Industry (GDV)). The introduction of a demographic factor in the financial equalization of the federal states after the end of Solidarity Pact II is conceivable. In Solidarity Pact II, the federal government made a total of 156.6 billion euros available to the eastern German federal states.

Germany has grown old – and will become even older in the years to come. Demographic change not only threatens our prosperity, but is also a challenge for our healthcare system and our social interaction. In our multimedia special “Silver Society” we deal with the mega trend and pursue the pressing questions of how we can honestly and together overcome the problems that need to be solved – and what constitutes a life worth living in old age.

Other ideas from the scientist: expenditure that is heavily dependent on age could be shifted to the federal government. In addition, municipalities or countries that have trained young people could receive compensation from the regions to which people move after completing their education. Kluge draws a comparison to football: “Training clubs receive compensation when young players switch to another club and also share in future transfer income.”