Longevity, retirement and the aging population: Aging populations could create more than $400 billion of incremental retirement-related revenue by 2028

Overview

This global asset- and wealth-management study examines how population aging, longer retirement periods and weaker traditional pension support are reshaping retirement needs. It argues that firms able to combine investment management, advice, longevity protection and technology can access a large revenue opportunity, while fragmented product-led models risk losing relevance.

Core views

The report begins with a mixed industry backdrop. Global asset-management AuM recovered in 2023 to slightly above its prior peak after the $12 trillion 2022 decline, largely because of market performance rather than flows. Morgan Stanley and Oliver Wyman forecast 7.3% annual AuM growth from 2023 to 2028, with market performance expected to contribute twice as much as net flows. Private markets and fixed income are the principal growth areas, whereas active equities continue to face outflows as investors shift toward lower-fee passive products. The report notes that only 51% of active investors outperformed their average benchmark during the 2020 sell-off, and only 24% beat the benchmark in the preceding decade. Private markets remain structurally important despite fundraising slowing from its 2021 peak. The report attributes the slowdown largely to institutional allocation limits and weak realizations rather than declining demand. It forecasts private-market AuM growth of 11.4% annually from 2023 to 2028, below the roughly 18.5% CAGR of 2018-23. Private equity is projected to grow at 12.7%, private credit at 16%, infrastructure at 15.0%, natural resources at 7.0%, and real estate at 8.5%. Private credit is supported by bank retrenchment from riskier lending and an estimated $5.5 trillion US asset-based-lending opportunity, though a softer credit market or stronger bank competition could reduce projected growth to 11-13%. The report sees a widening divide in asset management. Alternatives increased their revenue share from about 34% in 2018 to about 47% in 2023, while active strategies fell from about 50% to about 38%. Total industry revenue is forecast to grow 5.9% annually through 2028, but alternatives are expected to grow 10% annually and exceed 57% of revenue; public-market revenue is projected to grow only 1.8%. Traditional managers face margin pressure, with aggregate operating margins at a six-year low and traditional-manager margins down 4 percentage points from 2018 and 8 points from their 2021 peak. The report highlights gaining share from active-fund turnover, disciplined institutional pricing, structural cost reduction and combining systematic with fundamental investing as responses. It estimates that improved pricing could add roughly $50 million of revenue for a typical $500 billion institutional manager, while more aggressive structural cost actions could yield 20-40% savings. Wealth management has rebounded but faces cyclical and structural pressure. Global wealth rose 7.0% in 2023 and was expected to grow 7.7% in 2024; the report forecasts a 6.7% annual pace through 2028. North America and APAC are expected to generate about 75% of new global wealth, while the Middle East, Africa and Latin America grow fastest. Ultra-high-net-worth wealth is projected to grow 8.0% annually through 2028, adding about $26 trillion, but affluent and low-HNW clients remain the largest revenue pool. Net interest income supported wealth-management economics, peaking at 26 basis points in 2023 before falling to about 22 basis points in 1H24. Average revenue margin declined from 81 basis points in 2019 to 71 basis points in 2024, while the cost-to-income ratio rose to 77% in 2023 and remained 76% in 1H24. The central structural argument is that aging is transferring retirement risk from governments and employers to individuals. The number of people aged 65 or older in 2025 is more than double the 2000 level; by 2050, about one in six adults, or roughly 1.6 billion people, will be elderly. Falling birth rates and rising life expectancy compound pension strain: G7 life expectancy reached 83.0 years in 2024, 5.4 years above 1995, and is projected to reach 86.4 by 2050. Defined-benefit plans accounted for 63% of pension assets in the seven largest pension markets in 2003 but only 42% in 2023. Inflation has further damaged retirement purchasing power; the report cites a 17% increase in the US CPI since January 2021 and illustrates a hypothetical $2.50 million cash balance falling to $2.14 million in real value. Individuals face an increasingly complex retirement problem: accumulation, decumulation, longevity protection, healthcare costs and wealth transfer. The report says product proliferation has created a "paradox of choice," particularly for people without personalized guidance. It cites low retirement confidence: fewer than half of US working adults aged 50-75 believe guaranteed income will cover basic retirement expenses, while 29% of workers and 42% of retirees identify inflation as a major concern. Retirees often underspend because of longevity, healthcare and inheritance uncertainty: Japanese retirees spend only 1-3% of net worth annually, 40% of retired elderly people in Italy still accumulate wealth, and the average US retiree retained 80% of pre-retirement money after nearly two decades. The report estimates that these trends could create more than $400 billion of incremental annual revenue by 2028 across four sources: higher retail private-market allocations, migration of cash and deposits into retirement accounts, broader access to advice, and longevity-driven shifts in non-private-market allocation. For asset managers, the recommended opportunity is to build products that combine accumulation, decumulation and protection, and to tailor offerings to local pension systems, policy incentives and consumer preferences. Examples include buffered ETFs, managed-payout funds, structured products, retail private-market vehicles and mortality-credit pools. The report stresses that country-specific regulation is critical; Japan, for example, is highlighted as a market with regulatory support for higher defined-contribution and private-pension contributions. For wealth managers, the report emphasizes scalable personalized advice, broader private-market and insurance offerings, improved centralized investment management, and services designed for women and younger generations. It expects roughly $70 trillion of US wealth to transfer by 2042 and notes that 70% of US heirs tend to change financial advisers after inheriting wealth. Private markets may offer diversification and return potential for longer accumulation periods, but high minimums, limited liquidity, low transparency and regulation remain barriers. Insurance-linked products can address longevity and healthcare risks, but complexity and weak adviser and client education restrict adoption. US annuity sales reached nearly $385 billion in 2023, up 23% year on year and nearly 60% since 2019; 52% of US pre-retirees were considering annuities, versus 33% five years earlier. The largest opportunity, in the report's view, lies in a retirement ecosystem that links asset managers, wealth managers, insurers, recordkeepers and technology providers. It presents three delivery models: partnerships, deeper integration of multi-line firms, and technology-led platforms. Partnerships are flexible but can be difficult to govern and monetize. Integrated models can lower acquisition costs, improve customization and retain more economics, but firms often fail to realize these benefits because of fragmented strategy, incentives, pricing, governance and technology. The report finds no appreciable average valuation advantage for integrated firms versus stand-alone peers. Platforms offer a future vision of dynamic, highly personalized retirement solutions, but require substantial technological and regulatory progress. The report concludes that no single model is inherently superior; success depends on execution and overcoming silos. The final section revisits GenAI. The report says GenAI has moved from experimentation to production across sales, client service, investment, risk, compliance and operations. Executives commonly cite 20-30% efficiency improvement, but the authors argue that time savings alone understate its value because GenAI lowers the cost of cognition and enables work that was previously impractical. The report identifies broad adoption in proprietary-document querying, coding assistance and legal-document processing; selective adoption in automated due diligence and internal expertise discovery; and limited adoption in real-time intelligent hedging and trade optimization because mathematical and predictive limitations remain. The report argues that better deployment methods, including retrieval-augmented generation, improve accuracy by grounding models in relevant internal documents. Yet GenAI still lacks experienced judgment, remains weak in precise numerical extraction and is limited in prediction. Combining it with discriminative AI and maintaining knowledgeable human oversight are therefore important. The authors see bespoke development, proprietary data, workflow integration, executive support, technology skills and responsive employee-feedback channels as more decisive than model sophistication. Their conclusion is that GenAI is becoming table stakes, and firms that cannot embed it into workflows and client experiences risk ceding business to those that can.

Analysis framework

The report combines industry models, public-market and benchmark data, demographic and pension-system evidence, and more than 20 discussions with senior executives overseeing over $45 trillion of combined AuM. It first assesses asset- and wealth-management conditions, then links demographic and pension changes to retirement needs, identifies product and operating-model responses, compares ecosystem delivery models, and closes with practical GenAI adoption evidence.

Methodology notes

• Industry AnalysisSupply-demand framework

  Retirement ecosystem supply-demand analysis

  The report connects rising retirement needs created by aging, pension strain and longer lifespans with the products, advice, insurance and investment capabilities supplied by financial firms.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Retirement ecosystem value-chain analysis

  The report maps how asset managers, wealth managers, insurers, recordkeepers and technology platforms can combine capabilities to serve end clients and share economics.

• Valuation methodsP/E and PEG Valuation

  Forward P/E comparison

  The report compares forward price-earnings multiples and five-year total shareholder returns across standalone and integrated financial-services firms to assess whether integration has translated into observable valuation benefits.

• Other

  CAGR-based industry forecasting

  The report uses projected compound annual growth rates for AuM, revenues, wealth and asset classes through 2028 to quantify expected industry development.

Key data

• Retirement-related revenue opportunity> $400 billion by 2028Estimated incremental opportunity for wealth and asset managers from longevity and retirement needs.
• Global asset-management AuM growth7.3% CAGR, 2023-2028Market performance is expected to outweigh net flows by a 2:1 ratio.
• Private-market AuM growth11.4% CAGR, 2023-2028Below approximately 18.5% CAGR in 2018-2023.
• Private-credit AuM growth16% CAGR through 2028Forecast is sensitive to credit-market conditions and bank competition; downside case is 11-13%.
• Alternatives revenue share~47% in 2023; >57% by 2028Up from ~34% in 2018.
• Global wealth growth6.7% annual pace through 2028North America and APAC expected to create ~75% of new global wealth.
• Defined-benefit pension share42% in 2023Down from 63% of global pension assets in the seven largest pension fund markets in 2003.
• US annuity salesNearly $385 billion in 2023Up 23% year on year and nearly 60% since 2019.
• Potential GenAI efficiency gain20-30% improvementCommon executive estimate; the report cautions that a single metric does not capture full value.

Impact & implications

The report says the retirement opportunity favors firms that can move beyond isolated products toward integrated, personalized solutions spanning advice, investments, protection and service. It also argues that alternatives, insurance partnerships, scalable advice and effective GenAI adoption can be important enablers, but organizational silos, technology debt, regulatory complexity and weak user adoption can prevent value capture.

Risks

• Private-credit growth could slow if credit conditions soften or banks compete more aggressively.
• Traditional asset managers remain exposed to active-equity outflows, fee pressure and fragile operating margins.
• Private-market access for individuals is constrained by high minimums, liquidity concerns, lack of transparency and regulation.
• Integrated retirement models can fail to deliver benefits because of misaligned incentives, fragmented technology, governance complexity and organizational inertia.
• GenAI requires human oversight because it lacks experienced judgment, remains limited in numerical analysis and has weak predictive capabilities.
• Wealth managers risk client attrition during intergenerational wealth transfer if they do not adapt to the preferences of women and younger generations.

What to watch

• Policy changes that support defined-contribution pensions, private-pension contributions, target-date funds or private-market access.
• Retail demand and product innovation for private markets, downside-protection products, annuities and other guaranteed-income solutions.
• Whether firms can form effective asset-management, insurance, wealth-management and technology partnerships.
• Net interest income trends, cash sorting, revenue margins and cost-to-income ratios at wealth managers.
• Evidence that integrated financial-services firms can overcome silos and achieve measurable client or valuation benefits.
• GenAI adoption in daily workflows, supported by proprietary data, retrieval systems, human oversight and employee engagement.