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Why an Aging Workforce and Demographic Shifts Could Impact Stock Markets—and Medtronic PLC Employees' Retirement

'Understanding demographic trends, like the Middle-Old ratio, can offer invaluable insight for Medtronic PLC employees planning for retirement, as it highlights the potential for slower stock market growth in the future and suggests strategic adjustments to portfolios to align with shifting global economic conditions.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'By recognizing the impact of demographic shifts, such as the Middle-Old ratio, Medtronic PLC employees can better position their retirement portfolios to navigate upcoming market changes and demographic-driven economic shifts, helping their retirement planning to remain resilient in the face of long-term trends.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The impact of demographic shifts, particularly the Middle-Old ratio, on stock market trends and retirement planning.
How population changes influence market cycles and economic growth, with a focus on Medtronic PLC employees.
Strategies for adjusting retirement portfolios based on demographic forecasts, including exposure to emerging markets.

The long-term outlook for stock markets and retirement planning is being affected by the demographic changes happening in the United States and other industrialized nations. The 'Middle-Old ratio' (M/O ratio), which analyzes the ratio of middle-aged to elderly individuals, is a key factor that investors, particularly Medtronic PLC employees, should consider when planning for the future. For those preparing their retirement plans over the next decade or more, this ratio offers a unique approach to forecasting long-term stock market trends.

The Effect of the M/O Ratio on Stock Markets

The M/O ratio is determined by dividing the number of individuals aged 40 to 49 by the number of people aged 60 to 69. This metric has shown a strong correlation with long-term stock market cycles, especially in the S&P 500. Research conducted by Alejandra Grindal, chief economist at Ned Davis Research, has revealed that shifts in the M/O ratio often coincide with significant highs and lows in the stock market. ¹

For example, in 2000, when the internet bubble burst and the 1990s bull market reached its peak, the M/O ratio reached its highest point. This marked the end of an era of rapid economic growth and stock market gains. Following this peak, the ratio began to decline, mirroring the 2008 global financial crisis and the subsequent bear market. Since the middle of the 2010s, the M/O ratio has been rising, indicating that a shift may be on the horizon within the next decade.

It is essential to note that while the M/O ratio may act as an indicator for long-term market trends, it is not useful for forecasting short-term market movements. For instance, it did not signal the steep market declines in 2022. Nevertheless, it remains a valuable tool for understanding the cyclical nature of the stock market.

The Influence of Demographics on Stock Market Cycles

John Geanakoplos, a professor at Yale University, has made significant contributions to understanding the relationship between financial markets and demographics. His 2002 study highlighted that many of the boom-and-bust cycles in the stock market since World War II can be attributed to shifts in population composition, particularly the proportion of middle-aged versus elderly individuals. ² Geanakoplos explained that stock markets tend to rise when a significant portion of the population is in their prime working years and decline when a larger share of the population is elderly and no longer contributing to the economy.

This demographic shift is driven by the relative sizes of different age groups, not just the overall population. While some may focus on population growth when forecasting economic outcomes, it is the relative sizes of the middle-aged and senior cohorts that most significantly impact stock market performance.

It is expected that the M/O ratio will continue to rise into the 2030s. However, it will begin to decline again around the mid-2030s, which may signal a slowdown in stock market growth. This long-term pattern suggests that investors, particularly those at Medtronic PLC preparing for retirement, should be ready for potentially weaker equity returns starting in the early 2030s.

Taking Demographic Trends into Account When Managing Your Retirement Portfolio

Anyone preparing for retirement, especially Medtronic PLC employees with a long investment horizon, should understand how demographic shifts influence stock markets. This information can help you adjust your portfolio to align with anticipated market conditions, particularly if you are more than ten years away from retirement. As the M/O ratio seems to be peaking, it may be time to consider reducing exposure to U.S. stocks and reallocating to other regions, such as emerging markets.

For those nearing retirement, traditional strategies like those in target-date funds often recommend gradually decreasing equity exposure. For example, Vanguard’s target-date funds suggest a 30% allocation to U.S. stocks by the time an investor turns 65. However, due to demographic trends, a more cautious approach may be needed, especially for those in their 60s who wish to limit exposure to U.S. stocks.

Investors should also reevaluate the international component of their portfolios. While Vanguard's glide path recommends a 20% allocation to non-U.S. stocks, this may need to be adjusted based on the demographic outlook of specific countries. Over the next 25 years, developed nations outside the U.S. will also experience a decline in their M/O ratios, but not as sharply as in the U.S.

In the coming decades, emerging markets, particularly in Asia and Africa, are expected to see higher M/O ratios. As a greater portion of their populations enters middle age, these regions could experience economic expansion and market growth. To capitalize on these trends, it might make sense to increase your exposure to emerging markets, especially if you are nearing or already in retirement.

Conclusion: Preparing for Population Shifts and Stock Market Changes

Demographic trends, as illustrated by the M/O ratio, may influence stock markets and retirement planning. These trends indicate that starting in the early 2030s, investors, particularly those at Medtronic PLC with long-term horizons, may want to prepare for a period of potentially slower equity growth. As the middle-aged population reaches its peak, the stock market dynamics may shift, potentially leading to reduced returns in developed nations, including the United States.

To account for these anticipated demographic changes, it may be helpful to consider lowering your exposure to U.S. stocks and increasing your investment in emerging markets, where demographic trends appear more favorable. By adjusting your portfolio to reflect these long-term patterns, you can potentially position for a future with slower market growth and shifting global economic conditions. For a more sustainable retirement, begin planning now.

As the elderly population grows, the global workforce is shrinking, which could slow economic growth. A 2023 World Economic Forum report states that aging populations are contributing to a decline in the global workforce, potentially dampening economic productivity. This trend may lead to slower stock market returns and increased inflation, especially in developed countries where the aging population is advancing more rapidly.

Retirement planning must evolve as demographic changes and stock market patterns change. Understanding the M/O ratio and its implications could help you adjust your retirement portfolio, especially when considering opportunities in emerging markets. By aligning your investments with these demographic shifts, you can better prepare for a future where market growth may slow, supporting a more sustainable retirement.

Think of the stock market as a vehicle traveling along a winding road. For years, the car has been running smoothly, driven by a powerful engine (the large working-age population). But now, the engine is aging, and the fuel (economic growth and productivity) is running low. The aging population is like the car approaching a steep incline. Investors must adjust their speed, refuel with more strategic investments, and be ready for a slower journey into retirement.

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Sources:

1. Grindal, Alejandra. 'Why America's Aging Population Will Be a Problem for Stocks and Your Retirement.' Morningstar , 2 June 2025.

2. Geanakoplos, John, Michael Magill, and Martine Quinzii. 'Demography and the Long-Run Predictability of the Stock Market.' Brookings Institution , Jan. 2004, pp. 245–311.

3. Roberts, Stan. 'Why America's Aging Population Will Be a Problem for Stocks and Your Retirement.' MarketWatch , 2 June 2025.

4. VanEck Research Team. 'Emerging Markets: Policy Uncertainty Tempers a Strong Start to 2025.' VanEck , May 2025.

5. BlackRock. 'Five Forces Shaping Retirement.' BlackRock , Feb. 2025.

What are the eligibility requirements for the Medtronic Retirement Plan, and how do they apply to employees who were hired before and after the cut-off date of January 1, 2016? Employees need to understand these nuances, as they affect the types of retirement benefits they may be entitled to under the Medtronic Retirement Plan.

Eligibility Requirements: Employees hired before January 1, 2016, may be eligible for either the Final Average Pay Pension or the Personal Pension Account benefit, depending on their hire date. Employees hired or rehired after January 1, 2016, are not eligible for the Medtronic Retirement Plan(Medtronic_2016_June_Ret…).

How does the vesting process work for benefits accrued under the two types of pension benefits offered by Medtronic, namely the Final Average Pay Pension and the Personal Pension Account? Understanding how long employees need to stay with Medtronic to secure their benefits can influence their retirement decisions.

Vesting Process: The Final Average Pay Pension benefit becomes nonforfeitable after five years of service or reaching age 62, while the Personal Pension Account becomes vested after three years of service(Medtronic_2016_June_Ret…).

Can Medtronic employees expect any differences in the way their pension benefits are calculated if they decide to retire early versus waiting until normal retirement age? It's crucial for employees to know how early retirement might impact their payouts from the Medtronic Retirement Plan.

Early vs. Normal Retirement Calculation: Early retirement benefits under the Final Average Pay Pension will be reduced based on the age at retirement. For example, at age 55, employees receive 50% of the normal benefit(Medtronic_2016_June_Ret…).

In what ways can Medtronic employees maximize their Personal Pension Account benefits, especially regarding contributions and interest credits during their employment? Employees should consider strategies that could enhance the value of their retirement accounts when retiring from Medtronic.

Maximizing Personal Pension Account: Medtronic credits 5% of eligible compensation annually to the Personal Pension Account, which also accrues interest based on the 10-year U.S. Treasury rates(Medtronic_2016_June_Ret…).

How do the various forms of retirement benefit payments, such as annuities and lump sums, work within the Medtronic Retirement Plan? Employees must comprehend each option's benefits and drawbacks to make informed decisions about their retirement payouts.

Benefit Payment Options: Employees can choose between receiving their pension as a single life annuity, joint and survivor annuity, or a lump sum payment depending on their circumstances(Medtronic_2016_June_Ret…).

What protections does the Medtronic Retirement Plan offer regarding spousal benefits and qualified domestic relations orders (QDROs)? This understanding is particularly important for employees who may go through life changes, such as marriage or divorce.

Spousal Benefits and QDROs: The plan provides protections for spousal benefits, including joint and survivor annuities. QDROs may mandate the division of pension benefits in the case of divorce(Medtronic_2016_June_Ret…)(Medtronic_2016_June_Ret…).

How can employees ensure they receive all the necessary forms and meet the deadlines required to initiate their retirement benefits from Medtronic? The efficiency in this process is key for a smooth transition into retirement.

Forms and Deadlines for Retirement Benefits: Employees must contact the Retirement Service Center and submit required forms within 180 days of retirement to start receiving their benefits(Medtronic_2016_June_Ret…).

What specific steps should employees take if they receive a benefit denial or feel that they have been underpaid by the Medtronic Retirement Plan? Knowing their rights and the process for appealing decisions is essential for protecting their financial interests.

Handling Benefit Denials: Employees can appeal a benefit denial by submitting a written claim to the Plan Administrator within one year of discovering the issue. A formal appeals process is in place(Medtronic_2016_June_Ret…).

How does the Medtronic Retirement Plan guarantee the protection of pension benefits in the event of plan termination or underfunding? Employees will want clarity on how their pensions are safeguarded against uncertainties that could affect their retirement security.

Plan Termination Protections: The Medtronic Retirement Plan is insured by the Pension Benefit Guaranty Corporation (PBGC), which protects pension benefits in the event of plan termination(Medtronic_2016_June_Ret…).

For employees seeking additional information or clarification about their retirement benefits with Medtronic, what are the best ways to contact the Retirement Service Center? Establishing contact routes can assist employees in navigating their retirement planning effectively.

Contacting the Retirement Service Center: Employees can reach the Retirement Service Center for assistance by calling 1-844-335-9042 or visiting retirement.medtronic.com(Medtronic_2016_June_Ret…).