Nest Egg: Adapting to a 100-year lifespan
INVESTMENT ADVICE with Conor Martin
A CHILD born in the Developed World today has a better then 50-50 chance of living beyond 105. That’s an actuarial fact thanks to medical advances and improved living standards right across the Western world.
For most of human history, the average lifespan was considerably less than 50 years. It began to rise considerably in the 19th century, hitting 49 in the United States in 1900, and then it took off in the 20th century.
The dramatic increase in average life expectancy during the 20th century ranks as one of society’s greatest achievements and equates to approximately three additional months in life expectancy per year! Several factors have contributed to this upswing in our longevity, including declining infant deaths, better management of infectious diseases and more widespread access to clean water in many parts of the globe.
Much of the improvement in life expectancy in the 19th century was achieved not because people were living into what we now consider old age but because fewer children were dying before they reached adulthood.
Ageing populations create both immense challenges and opportunities.
Retiring on your 65th birthday and relying on the State Pension in your retirement will not be for everyone as we move forward, especially the self-employed, company directors and those outside of the more predictable Civil Service type of career.
Most of my clients have no desire to retire at 65 years of age. Most of them who work in jobs they enjoy want to continue as long as they can, maybe on a 3-day week or in more of an advisory capacity if possible. Research shows that an active mind is extremely important to extend your lifespan. Government policy and society needs to adapt to increased life expectancy. It is time to embrace senior citizens as an enormous knowledge resource to our society rather than a burden.
If I’m looking for a second opinion on something I tend not to phone a thirty-something friend of mine who hasn’t witnessed such a scenario before. I’ll call someone of my own age group or much older who has been in the trenches (usually my mother!), to ask their opinion because they’ve got the experience to deal with such a situation. If you had to have a serious life-saving operation in the morning would you rather see a fresh-faced young doctor walking towards you or one with some grey hair who’s performed this operation hundreds of times?
Japan is now providing a model of dealing with an ageing population. It has the world’s highest life expectancy and appears to be the only country to have adopted the idea of century-long living as a national project. Their belief is that lives will no longer consist of the 3 stages of education, work & retirement. Children born today may delay settling into jobs and have an “explorer” phase from 18 to 30, then change direction several times in what could be 50-year plus careers. They will need further education or retraining at various stages.
The Prime Minister Shinzo Abe recently assembled ministers, academics, and business & union leaders into a Council for Designing the 100-Year-Life Society. (Now that’s a proper forward-looking attitude!). Its recommendations included large increases in care workers’ and sharply expanding “recurrent” education, to facilitate higher employment among the elderly. Business leaders have taken up the challenge also realising how valuable the senior citizens are to development of the economy. Entrepreneurs are opening gyms for senior citizens while robotics makers are creating devices to help the elderly work longer.
Governments & companies everywhere should follow the Japanese model. Preparing for century-plus living will require complex, co-ordinated action by businesses and government institutions. It’s impossible to put an old head on young shoulders as we know. So why not incentivise the old heads to guide the young shoulders on a 3-day week while they enjoy semi-retirement?