There are a number of demographic, economic and sociological changes happening that are affecting people’s lives, and by extension, the financial services industry, according to Ken Dychtwald, president and CEO of Age Wave.
First is the extraordinary growth in the average life span. “On the first day of the 20th century, the average life expectation was 47. On the last day, it was 78. Today, it’s approaching 80 and continues to rise,” Dychtwald told Investment Advisor.
He suggested there’s a “real possibility” that in the decades to come, living to 100 won’t just cease to be rare, it could become the norm. “As a result of massive breakthroughs during the 20th century, in public health, in sanitation, in antibiotics and pharmaceuticals and a pretty spectacular list of miracles, we now have this gift of a longevity bonus.”
That bonus has affected how clients and advisors approach planning for retirement—in the first place that they’re planning for retirement at all. “In the 18th century, couples didn’t say, ‘Gee, honey, what would you like to do after retirement?’ You wouldn’t be alive after retirement.”
Longer life spans aren’t just a question for demographers, either. “The average citizen is scratching their head and thinking, ‘When will I be old? When should I stop working? How long might I live?’”
The sheer size of the boomer generation has forced an evolution in retirement itself, Dychtwald said. “If we just simply had more people heading to generally the same stage of life, with the same habits and behaviors as our parents and grandparents and their parents, that would be pretty easy to plan for,” he said. “In fact, retirement is going through a massive facelift.”
“What’s happening is that retirement is not only going to include more work, it’s coming alive with vitality and with new options.” Boomers don’t even use the word “retirement” that often, he said.
“It’s a little odd if you’re starting an entrepreneurial business when you’re 66 to think of yourself as retired. You might indeed be retired from your first or your core career, but now you’re off to your encore career.”