Countries need a fertility rate of about 2.1 kids per family to maintain a stable population. But two-thirds of the world’s population already lives in countries where fertility is below this so-called replacement rate.

“Falling fertility rates are propelling major economies toward population collapse in this century,” McKinsey predicted. 

Some of those economies are on track to see 20%-50% population declines by 2100, requiring big changes to societies and governments operate.

But if the demographic trends continue, younger people will endure slower economic growth while supporting bigger cohorts of retirees, eroding the historic flows of generational wealth, the study warned.

“The current calculus of economies cannot support existing income and retirement norms—something must give,” it said. 

To be sure, some countries are in worse shape than others. China’s population is projected to crash 55% by the turn of the next century. Italy’s will sink 41%, and Brazil’s will drop 23%.

But helped by immigration, the U.S. should see an increase of 23%. Still, even the U.S. must grapple with the growing costs of Social Security and Medicare.

The primary driver isn’t longer lifespans, McKinsey said. Instead, it mostly a “youth deficit,” meaning fewer young people.

To illustrate the growing burden on younger people, the study noted that the world’s support ratio was 9.4 in 1997, or more than nine working-age people supporting one older person. The ratio is down to 6.5 today, and will drop to just 3.9 by 2050.

“Absent changes, increasing numbers of seniors will cause government deficits and debts to continue rising,” the study said.

Not only will that challenge a country’s debt sustainability and social contract, it could throw off the global geopolitical balance and even efforts to fight climate change. McKinsey said its research has found that sustained economic growth is necessary to pay for the net-zero transition.

To avoid seeing per-capita GDP growth slow, countries must boost fertility, labor intensity, and productivity, the study said. But that will be challenging as there are no clear instances of a country successfully increasing its birth rate, while productivity has slumped around the world (though the U.S. has seen a recent uptick).

Either way, it will take time to reverse the demographic trends, so governments and economies must start adapting to them now, according to McKinsey.

For example, businesses will have to adapt to seeing older people comprising bigger shares of their workforce and customers. The use of artificial intelligence can also help improve labor productivity.

Despite the immense challenges ahead, McKinsey sounded optimistic about the future.

“Humanity has demonstrated incredible resourcefulness throughout its history, and no doubt will find opportunities to thrive amid the challenges that a worldwide change in demographics poses,” it said.

The population warning comes as countries struggle to encourage more people to have kids, while the likes of Elon Musk and others in the tech sector have warned on shrinking populations.

In 2021, Musk called population collapse potentially the greatest risk to civilization’s future. And in 2023, he urged people in Italy and other developed countries to have more kids. 

And while stumping for Donald Trump on the 2024 campaign trail, he said people should have more kids without stressing too much over the costs associated with rearing children.

“I think people worry too much about having kids, and it’s sometimes difficult to make ends meet and whatnot,” Musk said at a rally in Harrisburg, Pa., in October. “But honestly, there’s really no time like the present. Just have kids. You won’t be sorry. It’ll work out.”