The world is aging, and it’s happening a lot faster than many expected. As of 2015, there were roughly 617 million people age 65 and older worldwide. By 2030, that number is on track to exceed one billion.
What that kind of demographic upheaval means for the world remains to be seen, but businesses need to make changes now if they hope to survive this transition. Joe Coughlin, the founder and director of the Massachusetts Institute of Technology AgeLab, a multidisciplinary research program that studies the over-50 population, and the author of “The Longevity Economy: Unlocking the World’s Fastest-Growing, Most Misunderstood Market,” addressed the implications of the trend for financial advisors in a recent interview with Wealth Management magazine.
“There are two industries that own longevity—one is financial services, because it’s always trying to get us to think about old age and how to plan for it. The other is pharmaceutical, so health and wealth are two bookends. But if you talk to retail, media or the auto industry—anyone over 35 years old is virtually invisible.
But most financial advisors are still focused on the concept of retirement as we once knew it. That’s a made-up concept—and it needs to be retired. We need a new story about this part of life, but financial advisors are still making plans today based on an old narrative that is no longer realistic.
The old story of retirement is about pulling back—you travel, play golf or tennis or walk on the beach. Or, we’ll all be riding bicycles as we age. But aging has so fundamentally changed that these old narratives are not going to be adequate, because our needs and interests are changing. What older people today might aspire to become or accomplish falls by the wayside.
So I’m suggesting advisors need to reinvent themselves as longevity planners or navigators. Start anticipating for us not just expenses but this entirely new life stage that is uncharted territory.”
The population is aging, that much we know. But it’s the implications of this for individuals that should really have the attention of financial advisors.
What happens when medical science begins to help everyone live longer lives? We’ll all need to plan for longer retirement periods and think longer term than many of us.
But what if it doesn’t stop there?
What if we all live to 100? 110? 150?
How will that change the prevailing thinking about retirement planning and investing? How will that change the “four percent rule”? How should we get ready for a 50+ year retirement?
These are the questions that advisors need to be prepared to answer. Soon, and for years to come.