In the 2020s, Japan’s baby boom generation will enter their “latter-stage elderly” years; in the latter half of the 2030s, the “second-generation” baby boomers will become elderly. In addition to this, the decline in the working generations will be ongoing. The dramatic progression in the aging of Japanese society which is inevitably coming is confronting the nation with major issues. In order to gain a clear perspective on the effect of this reality, the authors conducted an estimate of future expenditure on social security up to fiscal 2041, focusing in particular on changes in the population structure.

The results of estimation taking into consideration policies currently being put into effect indicated that social security expenditure would increase from 21.5% of GDP to 24.5% (in terms of nominal values, this represents an increase from 116.2 trillion yen to 190.7 trillion yen). The aging of Japanese society will see a significant increase in expenditure for medical and nursing care, with the increase particularly high in the area of nursing care. With a simultaneous increase in the population needing to be supported and decline in the population providing support, a considerable burden will be placed on the working generations. In the case of medical care, in addition to population factors, the rapid advancement of treatments and technologies must also be borne in mind.

Against the background of the nation’s ongoing difficult fiscal situation, it goes without saying that the problems facing Japan’s social security system represent an urgent policy agenda. As the aging of the population progresses, numerous issues must be addressed, including reform of the structure of benefits and burdens and the formulation of responses for people facing ever-greater risk. It is vital that we embrace a realistic vision of Japan’s future and proceed steadily with the implementation of policy efforts on this basis.