Exploring Longevity Through an Economic Lens
In September 2022, our CEO Mike Mansfield chaired a panel discussion with three experts looking at the impact demographic change is having on the way we are living, working and consuming
Over the past 60 years, we have added 20 years in longevity to our lives. We have done this by adding years to the end of our lives without changing many of the milestones during our lives, like when we start and stop things like education, work, and retirement. We need to reimagine how we live and work if we are to maintain solidarity in our social contract and ensure the long-term sustainability of our retirement system.
Just shy of three in ten workers are very or extremely confident they will retire in a comfortable lifestyle
Only one in three see retirement as a cliff edge event where they stop work from one day to the next
If we improve employment participation for people over 50 in the UK we would improve per capita GDP by 6.7% by 2050
David Sinclair, CEO of the ILC-UK emphasized the critical importance of maintaining good health through the course of our lives. Being healthy enables us to work longer which in turn allows us to save more and spend more. As we live longer, we will need to have more savings to fund our retirement. Younger people today are aware that they will have to work longer and will be less well-off than their parents in older age. The reality is that many people retire before their planned retirement age which is a risk for people preparing for retirement today and those planning for the future. In many ways the challenges we face are everyone’s problem and nobody’s fault. We need to collectively find solutions without looking to blame each other for the situation we are in.
Yvonne Sonsino, a partner at Mercer, outlined a few trends in employment: self-employment is becoming more prevalent with 15% of people in the UK working for themselves. There is also a reduction in full-time work and an increase in part-time working along with a large increase in contractor working. Contractors are a group that are often financially vulnerable as they may not enjoy the same access to benefits that other workers do. People are working longer and flexing into retirement. The flexibility quotient model developed by Mercer enables companies redesign jobs so that they can be done by people in ways that suit their circumstances such as remote work and in working in different ways. Companies can also look at how they design teams so that workloads can be shared and people from different generations can participate and share the physical workload. Flexibility is a benefit creates a working environment where a greater number of people can participate at different phases in their lives.
Juan Fernández Palacios, Director of Ageinomics at Fundación MAPFR spoke about the fact that in 2019, 60% of expenditure in Spain came from people over age 50 who represented 26% of the population. The Senior Consumption Barometer was developed to look at the consumption patterns of people in Spain over 55 which is the age people start thinking about their retirement. Some of the key findings are that people over 55 have high purchasing power with close to 90% owning their own home and 56% being able to save every month. The main categories that older people spent their money on were food, housing and technology and that 78% of the group are using technology every day. People have a strong preference to continue living in their own home and are taking care of their diet and exercise. Understanding how people over the age of 50 are spending their money is important for companies to identify opportunities in the future.
The key takeaway from the discussion was that demographic change is having a critical impact on how we live, work and save. We need to work together to create the opportunities for people to help people stay economically active so that they can continue to contribute economically and socially thereby ensuring the long-term sustainability of our social contract.