The future of retirement

The notion of retirement is a relatively recent one, and a range of coalescing drivers might make it a transient one in human history. The world is ageing at an unprecedented rate; some 15 minutes are believed to be added every hour to a life expectancy that now exceeds one hundred years at birth in the UK[i]. This growth, it should be noted is independent of some of the truly revolutionary therapies and innovations that some suggest are on the horizon.

Cottage, Lake, Water, Nature, Summer, Tranquil, Outdoor

Coupled with a less certain investment outlook and in some cases, cultural predisposition against pensions savings, and the outlook for pensions deficits is gloomy at best. The World Economic Forum, for example, suggests that by 2050, there will be a global shortfall of some $400 trillion. To put the figure into perspective, this is five times the global economy[ii]. New policies extending the retirement age, innovative quantitative methods for planning purposes and other measures could help, but the scale of the problem would appear too significant to be met solely by reactive policies. Were the pensions problem resolvable by simple legislation it would have already been done.

Many working age people have not yet started saving for retirement or received any retirement advice. Looking at tomorrow’s over 65s reveals a complexity of financial issues; student debt, expensive housing, anaemic wage growth and the rise of the gig-economy. As a result, globally, a third of Millennials expect to work well into their 70’s and one in eight expect to work until they die[iii]. There is a temptation to view this as a problem, yet this ignores the wider changes impacting work. The move away from the traditional four stages model of life is significant; in its place could emerge a model that encapsulates learning, work and leisure episodically and as needed. The framework is not yet in place to guarantee access to continuous learning or accruing benefits from working in the gig-economy but social change is already happening. Patterns of working among older people have changed rapidly in the past couple of decades and the situation is likely to continue to evolve, not least with the expected waves of automation that will impact the economy.   We are already seeing a higher proportion of over 65’s working, not out of monetary need, but rather for the enjoyment – socially and professionally – that work can provide.

Ultimately, we must ask what role retirement plays in society, whether or not retirement is beneficial to individuals or society, and imagine new models for framing our life stages. Other questions abound; what would retirement look like under a societal system of guaranteed income? Perhaps most importantly and imminently, business leaders and policymakers need to be thinking now about how to integrate 75 and even 80 year olds in the workplace.

[i] http://www.dailymail.co.uk/health/article-4556948/Fifteen-minutes-added-life-expectancy-hour.html

[ii] https://www.bloomberg.com/news/articles/2017-05-26/retirement-savings-gap-is-seen-climbing-to-400-trillion-by-2050

[iii] http://www.cnbc.com/2016/05/31/many-millennials-expect-to-work-until-they-die.html

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