Policy Brief: California’s Aging Population

This is a must-read article.  California is changing via demographics.  We do not notice it, day by day, but in time, the make-up of California will change dramatically.  Oh, by 2045 Texas will have more people than California, only 20 years away.

“By 2040, 22% of Californians will be 65 or older, up from 14% in 2020. The older population (aged 65+) will increase by 59%, while the working-age population (aged 20–64) will remain largely unchanged and the child population (aged 0–17) will decrease by 24%. This shift will result in an old-age dependency ratio of 38 older adults per 100 working-age adults, up from 24 in 2020.

Increasing diversity. The older adult population will become increasingly diverse, with no single racial or ethnic group constituting a majority. Growth rates will be highest among Latino and Asian older adults. A high proportion of Latino (60%) and Asian (85%) older adults will be foreign born, with about 75% speaking a language other than English at home. This increasing diversity will require culturally and linguistically appropriate services and a more diverse healthcare workforce.”

These changes will cause the productive people to flee the State even quicker.  Who wants to finance a Socialist State?

Policy Brief: California’s Aging Population

Hans Johnson, Eric McGhee, Paulette Cha, Shannon McConville, and Mary Severance, with research support from Shalini Mustala, PPIC,  2/15/25

Policy Brief PDF

Supported with funding from The SCAN Foundation

Related ContentFull Report →

California is on the cusp of an unprecedented demographic shift: projections indicate a dramatic increase in the state’s older adult population by 2040. To help state leaders prepare for the fiscal and policy impacts of this shift, we explored how California’s older population is projected to change, highlighting characteristics that are most relevant to policy and program considerations.

Key projections raise important policy concerns

Dramatic growth. By 2040, 22% of Californians will be 65 or older, up from 14% in 2020. The older population (aged 65+) will increase by 59%, while the working-age population (aged 20–64) will remain largely unchanged and the child population (aged 0–17) will decrease by 24%. This shift will result in an old-age dependency ratio of 38 older adults per 100 working-age adults, up from 24 in 2020.

Increasing diversity. The older adult population will become increasingly diverse, with no single racial or ethnic group constituting a majority. Growth rates will be highest among Latino and Asian older adults. A high proportion of Latino (60%) and Asian (85%) older adults will be foreign born, with about 75% speaking a language other than English at home. This increasing diversity will require culturally and linguistically appropriate services and a more diverse healthcare workforce.

Housing stability. Seven in ten older adults are projected to be homeowners by 2040, slightly down from 73% in 2020. Some will be “housing rich, income poor.” The 30% who will be renters face greater financial burdens due to lower incomes and increasing housing costs. Helping homeowners modify their homes to age in place and helping older renters stay housed will keep older Californians in their communities and reduce unnecessary transitions to nursing care.

More older adults in the labor force. The share of older adults with incomes less than twice the poverty level is expected to remain substantial at 22% in 2040; given the large increases in the number of older adults, there will be about 600,000 more who are low-income. Labor force participation is projected to increase for adults aged 65 to 74, especially those who are less-educated—possibly out of financial necessity.

Strong preference for aging in place. Despite a 51% increase in older adults in institutional settings, only 3% of the total older population is expected to live in such facilities. The vast majority are expected to remain in their own homes. About six in ten older adults will be living with spouses, and the share living alone will decrease from 22% to 18%. However, one in three adults over 80 will have difficulties staying in their homes without assistance, and one in five will experience self-care limitations.

Increased demand for long-term care. Older adults with incomes too high to qualify for Medi-Cal face high and rising costs for long-term care in assisted living facilities and nursing homes. Wealthy individuals may be able to cover long-term care expenses. For low- and middle-income Californians, however, financing this level of care is a major challenge.

How can the state prepare?

Ongoing research and policy development will play a crucial role in helping all Californians age with dignity, security, and a good quality of life. Our own research has yielded some encouraging findings, but our projections also reveal concerning trends. The economic divide among older Californians is likely to remain large, with substantial numbers living in or near poverty. Moreover, demand for services will grow dramatically, largely due to the doubling of the 80-plus population.

State workforce and budget priorities will need to shift to meet health care demand. The growth of geriatric expertise in health care is not on track to meet demand. In California, a mere 5% of providers have training in geriatrics. Beyond physicians, nurses, and other well-paid health professionals, the state will need to bolster its home health and personal care workforce. The health needs of older adults will also have a major impact on state spending. Medi-Cal is already the primary payer for long-term care, and is taking on increasing importance in home- and community-based services that help Californians age in place. Long-term care costs account for over 30% of Medicaid spending nationwide and are projected to grow along with the aging population.

Workplace adaptations may be needed. Increased labor force participation among 65- to 74-year-olds, particularly those with less education, may require workplace adaptations and policies to support older workers. The state’s Master Plan for Aging endorses jobs and volunteering that foster intergenerational engagement for older adults. But interventions may be needed to support those with the greatest financial need.

Housing stability will be key to aging in place. The high rate of homeownership among older adults suggests a need for programs that help homeowners maintain and adapt their homes as they age. For renters, affordable housing options and rent support programs may become increasingly important to prevent displacement and homelessness.

Family caregivers and community services will also be important. Home- and community-based services help many older adults age in place, and they are much less costly than institutional living. Medi-Cal currently spends $22 billion annually on these services, but there is insufficient data on their effectiveness. The state will need to enhance oversight, enhance geographic provider coverage, improve communication, and simplify access.