3 ASX stocks to benefit from Australia's ageing population

An older couple hold hands as they bounce happily high in the air.

ASX stocks that benefit from long-term tailwinds can provide a real boost for earnings over the long term. I think the ageing population tailwind is strong and one of the clearest tailwinds that’s going to happen.

The 2023 intergenerational report said over the next 40 years the number of Australians aged 65 and over will more than double and the number aged 85 and over will more than triple. The number of people aged at least 100 is expected to increase six-fold. Â

Which businesses could benefit from the growing number of older Australians? I think the three ASX stocks below could be leading beneficiaries of the tailwind.

Challenger Ltd (ASX: CGF)

Challenger is a leading ASX financial share that provides annuities. This enables people to turn their capital into a guaranteed source of income. Retirees may appreciate the level of certainty that an annuity can provide.

As the number of older Aussies increases, it should mean a growing amount of people moving from the accumulation phase to the retirement phase with their money, which could lead to stronger demand for annuities.

Australian superannuation assets are expected to increase to more than $9 trillion in the next 20 years, with 2.5 million Australians entering retirement over the next 10 years.

In the FY24 third quarter, group assets under management (AUM) grew by 6% for the quarter to $124 billion.

Lifestyle Communities Ltd (ASX: LIC)

This company develops, owns and manages affordable independent living residential land lease communities.

The business is benefiting from ongoing rental growth and the completion of new communities. Ten projects are currently in active development, and two more projects are scheduled to launch in 2024.

The ASX stock saw ‘annuity’ revenue increase 16% in the FY24 first half, driven by higher rental revenue from an increased number of homes under management and the inflation-linked 6.6% year over year rental increase. Lifestyle Communities says one of its key selling points is providing affordable housing to Australians aged over 50.

Its site rental income has grown from $14.5 million in the first half of FY22 to $20.5 million in the first half of FY26.

Medibank Private Ltd (ASX: MPL)

A growing number of older Aussies may decide to sign up for private health insurance so they can have any elective surgeries that they plan to have.

Australia’s growing population is also helping increase the overall demand for private health insurance.

Despite the current economic challenges and Medibank’s cyber attack, it managed to grow its Australian policyholders by a net 0.2% over the six months to 31 December 2023, while net non-resident policy unit growth was 12% over the six months to 309,000 (and it rose 34% over 12 months to December 2023).

I think the growing number of policyholders will help the company’s underlying net profit over the coming years and help push the Medibank share price higher.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.