How a long lifespan can complicate retirement
We’re living longer. On average. It’s true that too many die young, but overall we’re living longer.
I mentioned in a previous post the findings of Lynda Gratton and Andrew Scott from London Business School. In their book The 100-Year Life they estimate that:
- a child born in the West today has a 50% chance of living to 105
- a 20-year-old has an even chance of living to 100
- one out of two 40-year-olds will live to 95
- and a 60-year-old has a 50% chance living to 90+
You can add to this the World Health Organisation (WHO) report that the global population of 60+-year-olds has doubled since 1980.
And WHO also estimates that in a few years the number of adults over the age of 65 will be greater than the number of children under the age of 5.
Gratton and Scott suggest there are four reasons for the lengthening of life in our era.
- Better health and nutrition
- Better medical care
- Better sanitation
- Public health campaigns—anti-smoking campaigns, for instance
The complication for governments
This is why governments worry about funding pensions into the future. Why attempts are made to lift the retirement age. And why we should worry that our governments might run out of money for pension funds.
Take Australia, for instance: The age pension was introduced in 1908. To be eligible, a male had to be 65 years old; and a female 60. However, the life expectancy for males then was 55.2 years and for females 58.8 years.
100 years later, in 2008, the life expectancy for males was 79.3 years (24.1 more years than in 1908) and for females, 83.9 years (25.1 years more). Yet the current age for both men and women to be eligible for the age pension is 65 ½ years, rising to 67 years in 2023, with a proposal of 70 years to be introduced in 2035.
The complication for individuals
A longer lifespan brings challenges to individuals because living long is not much of an achievement if we’re barely alive for our last years.
But lifespan is only one element. There are at least three other ‘spans’.
Our health span is also important. It’s important to be able to live fully the extra years we will probably have.
Then there’s our mind span. That’s having a mind that’s functioning well in two ways: understanding and engaging in what’s happening around us; and being able to communicate our thoughts well.
And what about our money span? That’s about having finances that last our entire life—with, hopefully, a bit left for family when we’re gone.
Some in the retirement field talk about the ‘longevity risk’ in retirement. Usually it’s a reference to finance and is about having enough money to last the whole of life. But these other spans are also important.
What I learned from my auntie
I saw what happens when it all comes together well last Sunday. I attended the 150th anniversary of my mother’s family church. It was a Methodist (now Uniting) Church in my small (population about 450) hometown.
Auntie Eva, my mother’s only surviving sibling, was there. She’s a spritely 97-year-old. Yes, she did need something or someone to lean on if she didn’t have her walker, but her mind is still reasonably sharp. We chatted for quite some time.
She lives in her large family home, by herself. When I asked her son how she managed, he talked about Meals on Wheels and a cleaner coming in. He also has his business office in her home, which means he’s there most days.
Except for this help, she’s very capable at home.
Sunday was a long day. And she was there from the 10.30 am start to about 4 pm or so. Someone said to her that she could have a sleep on the drive home.
‘I don’t need a sleep,’ she told them. And she didn’t act like she did.
At 97 she still had the other ‘spans’ working together to keep her lifespan meaningful. Genetic? Probably not—none of her brothers or sisters survived to anywhere near that age.
The important thing to recognise is that all these spans can be worked on and strengthened before retirement.