New Opportunities as Life Expectancies Increase
Over the last 150 years, life expectancy has increased by two to three years each decade. If this rate continues, then most children born in industrialised countries can now expect to live beyond the age of 100.1
Until 1950, the average increase in life expectancy could mainly be attributed to improved living conditions and better healthcare, causing a decrease in childhood and early-life mortality. After 1950, the average life expectancy increased mainly due to a delay of mid – and late-life mortality.2 The result is striking: People are living longer, which is fundamentally reshaping society.
When, if at all, individuals think about their increased life expectancy, their focus tends to centre around planning for retirement.
Retirement is a universal challenge. Globally, the number of people over 60 is likely to grow more than five times faster than the under-60 population between 2018 and 2030.3 Such longevity not only impacts our working lives but there is growing evidence that it is changing our major life choices, what we spend our time and money on, and how we view life itself.
“Longer lives have far-reaching implications, not least with more years post-child raising offering great potential to reduce gender inequality and to transform personal relationships,” says Dani Saurymper, Portfolio Manager, Ageing and Lifestyle Research Lead, AXA Investment Managers.
“In just a couple of generations the traditional three-stage view of an individual career—where people moved systematically from full-time education to full-time work, and then to full-time retirement—is in need of a drastic revision.”
The age of multistage
Many members of Generation X, now in their 40s and 50s, are navigating increasingly volatile career paths while caring for their ageing parents. But, with less retirement savings to fall back on, multistage careers beckon.
Lynda Gratton and Andrew Scott advance the idea of a multi-stage life in their seminal book, ‘The 100-Year Life’. They contend that the days of knowledge and skills learned in your 20s lasting over a working lifetime are over. The future of working life, they say, will be about setting time aside to make fundamental investments in re-learning and re-skilling.
“We believe that people will switch to a multiple-career perspective. Each career stage may be different in terms of the sector involved or the role played, it may differ in terms of motivation, i.e., financial or social purpose, and will differ in terms of a trade-off between finances and leisure,” says Scott.
This extended working life brings a plethora of new opportunities. Education, because it is no longer largely confined to the early part of our lives, is set for a boom due to rising demand for all sorts of continued learning and re-skilling opportunities. The global education industry is now valued at over $5 trillion and remains in its infancy in terms of digitalisation. EdTechXGlobal forecasts phenomenal growth in education technology of 17% per year, to reach $252 billion by 2020.
Healthcare is another sector in ascendency. In the US, around 10,000 people reach their milestone 65th birthday every day, at which point personal healthcare spending doubles — and by the time they hit 85, these costs have more than doubled again.4
Professor Tom Kirkwood, Associate Dean for Ageing at Newcastle University, in Northeast England, has led a flagship project, The Newcastle 85+ Study, that has been gathering information about the fastest-growing sector of the population: those aged 85 and over. He calls our increase in longevity a “human triumph,” but says the focus is now turning to enabling people to have a better quality of life for longer.
“The challenge is to make the health span as long as possible, and to make that the priority over and above extending lifespan,” he says. “If we simply increase the lifespan, and by doing so we add to the number of years of poor, compromised health, most people would look at us with disdain and say, ‘That isn’t really what we want.5’
Other sectors that stand to benefit from longevity include fitness and beauty, travel, wealth management and entertainment. In fact, the retiring and elderly generations are expected to wield over $15 trillion spending power globally by 2020, nearly double the $8 trillion they accounted for in 2010. In North America, Western Europe and Northeast Asia, the 60 plus cohort is forecast to account for the bulk, at 55% of all consumption growth through 2030, according to analysts at McKinsey Global Institute.6
Despite being continually overlooked by marketers at the world’s biggest companies – the 50 plus cohort is only targeted by 10% of all marketing dollars in the US7 – on average, baby boomers are spending more per transaction online ($203) than both Generation X ($190) and the much-courted millennials ($173).8
Staying younger for longer
Longer lives with more transitions will require us to be better at dealing with change. Gratton and Scott highlight how evolutionary biologists discuss how some species benefit from neoteny—the preservation into adulthood of adolescent features - because adolescents deal with change better than adults. This argues in favour of juvenescence, or ageing young, and in effect “age inappropriate” behaviour.
When a race extends from 10 to 15 miles, you change your pace and hit the milestones later, they argue. The implication is that we need to rewire our thinking and our cultural norms away from ideas that certain numbers such as 18 or 65 should be linked with certain behaviours. It is not just retirement that is being pushed back. AXA IM’s Saurymper notes how shifts in consumer patterns in many ageing countries show this trend.
“In many developed countries, we see that the age at which people make key financial and lifestyle commitments continues to rise,” he says. “Whether it’s buying a house, getting married, having children or starting a career, these fundamental commitments are all occurring later in life. While there are numerous factors behind these shifts, a growing realisation among the young that they are going to live for longer is likely to be a significant driver.”
In 1950, the average age for US women to marry was 20; by 1990 it was 24, and last year it reached 27.4 years, according to the US Census Bureau. A similar story is being played out across the world: 20-somethings are taking on career responsibilities and commitments later in life due to a variety of reasons, and this is resulting in a more flexible and fluid workforce.
“Just like stock options become more valuable the longer they can be held, if you believe you will live for longer, then your options become more valuable, and early commitment less attractive,” Saurymper says. “The result is that the commitments that previously characterised the advent of adulthood are now being delayed, and new patterns of behaviour and a new stage of life are emerging for those in their 20s.”
It’s not just a Western phenomenon. Asia is on track to have the oldest population in the world in the next few decades; the proportion of people aged 60 and over is projected to grow in all Asian countries over the coming years, led by Japan and South Korea, and the pace of ageing in many parts of Asia and Asia Pacific is happening at a far quicker rate than the pace of ageing in the West.
Asian and Asia-Pacific countries and their Western counterparts could all reap a “longevity dividend” if older people were enabled to work for longer, but in ways appropriate to their age. Companies will need to start offering a mix of more age-friendly employment options and policies, more flexible roles and reduced time commitments. The mandate for governments is also correspondingly large, with the need to abolish laws that discriminate based on age.
Professor Kirkwood believes that for us to make the most of our longer lives requires a sea change in mindset. “I think one of the biggest challenges that confronts all of us organisationally—for companies, for governments, for care providers and for us as individuals—is how we reshape our whole attitude toward the journey we’re going to make through life,” he says. “Everything about ageing is changing, and we need to wake up to that.”
The rewards will be significant for those able to adapt the fastest. With more transitions and new life stages come shifts in consumption patterns, lifestyle choices and business, and of course, investment opportunities. But, to take advantage of them, we first need to recognise the fact that the world has and will continue to change and then begin to focus our attention on those sectors helping to propel economies into the future.
1 Christensen, K., Doblhammer, G., Rau, R., Vaupel, J.W. (October 3, 2009). Ageing Populations: the Challenges Ahead. The Lancet. vol. 374, issue 9696, 1196-1208.
2 Fogel, R.W. (2004). Changes in the process of aging during the 20th century: findings and procedures of the Early Indicators Project. Aging, Health and Public Policy: Demographic and Economic Perspectives. Waite, L.J., ed. Population Council, Vol. 30.
3 Forecasts Compiled by the U.S. Department of Commerce.
4 U.S. Centers for Medicare and Medicaid Services.
5 Professor Kirkwood Interview with Dani Saurymper.
6 McKinsey Global Institute.
7 AARP, March 2018.
8 Global Online Consumer Report, KPMG 2017.
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