Celebrating a 100th birthday used to be a rare occurrence.
But right now, there’s about half a million centenarians worldwide. In Australia, about 4,440 individuals are in their 100s.
In just over 30 years’ time, the United Nations estimates there will around 3.7 million centenarians globally.
What does that mean for our lives, our work and how we support ourselves as we live longer?
The gift of a long life brings unexpected complications say London Business School Professors, Lynda Gratton and Andrew Scott. In their book, The 100-year Life, they argue that we must re-think the way we work and structure our lives if we’re going to meet the challenge of longevity and enjoy it.
In this piece, we share their insights on how the patterns of our lives are likely to change, the new stages that emerge in a long life, and what we need to do ensure that our long life is a gift that we can live to the full.
Live Long and Prosper
Many children born in Australia today can anticipate living to 100. This continuing improvement in lifespans continues the trend of dramatic improvements since such records began more than 125 years ago.
Life expectancy at birth for Australian males has jumped from just 47.2 years in the 1880s to 80 years today. For females, it has increased from 50.84 years in the 1880s to just more than age 84 today.
We are living longer in each generation. Unforeseen or unfortunate circumstances aside, we can expect to live longer than our parents and grandparents, and our children will live longer than us.
Now many people worry that a long life could be a burden – with the spectre of declining health, Alzheimer’s and insufficient pensions.
Yet, if we re-assess, re-think and effectively plan, Gratton and Scott believe that a long life doesn’t need to be an extension of being old, but instead a gift of time.
“Imagine”, says Gratton “that every day I give you another 3 or 4 hours – what are you going to do with that time?” This, she argues, is what longevity is really about.
The end of the three-stage life
Gratton and Scott call the end of the linear “three-stage” life: education, career and retirement. They welcome a freedom from its constraints – with its set sequence, and choice only within this framework.
Instead, Gratton and Scott forsee a life with seven or eight stages – where the succession between stages is highly flexible. We can expect to have multiple careers, with breaks to recharge or learn new skills and with transitions. Reality is, we can already see this happening.
The Multistage Life
The multi-stage life envisaged by Gratton and Scott is one of great freedom and choice. As there are many ways to structure a multi-stage life, they believe that we will see the end of a strong link between age and stage.
“In the future you could be an undergraduate and be 20, 40 or 60. You could be a senior manager and be 30, 50 or 70.”
Instead of being defined by age, these stages will be shaped by mind-set – and the ideal mind-set according to Gratton and Scott, is one of “juvenescence”, the state of being youthful or growing young.
Gratton and Scott suggest that we will see three new life stages which they describe as: the Explorer, the Independent Producer and the Portfolio.
- Explorers observe their surroundings, figure out their likes and dislikes through trial and error, and discover their natural talents.
- People may choose to become Independent Producers at various times in their 100-year life.
- The Portfolio stage is not age-dependent, although people in their later years may find it an attractive option. People in the Portfolio stage engage in a combination of activities, such as working, volunteering, and pursuing their hobbies and interests.
“Re-creation will be more important than recreation,” say Gratton and Scott, as people invest in learning and skill development throughout their lives. A longer life journey will come with more forks in the road: times to choose among various options and take different directions.
Saving and building financial assets
A 100-year multi-stage life means we need to think differently about saving, building and spending financial assets.
One of the most important changes, say Gratton and Scott is that it will be critical to start saving early.
“It will be simply impossible for those starting work today – most of whom will be alive into the 22nd century – to accumulate enough wealth to support them in modest comfort for 25 years of retirement. For most, working longer is the only option, and the earlier people start to build financial assets, the broader the range of options they will have later.”
A second key change is that, in a multi-stage life, individuals will need to prepare not just for eventual retirement but also for career breaks and career transitions, all of which will require financing.
Retirement will still exist – that is, a time when you stop work – but it will occur later.
When you look at people in their mid-60s – an age we consider now as “retirement age” – we will see more varied behaviour, argue Gratton and Scott. Either people will choose to carry on in their existing roles and continue to earn if their skills and firm allow, or they will break and do something different.
“We are seeing a rise in entrepreneurship in people in their 60s,” say Gratton and Scott. This is about people becoming “independent producers” – where they do something that blends work and fun together, earn just enough to cover expenses and preserve savings.
A third key change, according to Gratton and Scott, is the imperative to understand and engage with money and finance. People can’t afford to ignore financial literacy and advice. With a longer life, there is a significant risk of depleting financial resources too early.
They believe that the three most common mistakes people make are:
- Believing that they can live on the income from their assets and pension (without doing the numbers and having a plan).
- Assuming that the equity in their home will support them in retirement.
- Trying to outsmart market averages with a superior investment strategy.
They emphasise the important of having a sound financial plan. And then it will be critical to keep your plan alive and aligned with your life changes.
How can you get ready for this radical change?
Gratton and Scott offer five ideas:
1. Audit your tangible and intangible assets today and start planning your future.
2. Use your free time to invest in fitness, skills and relationships.
3. Think about the experiences you want to have and plan for them.
4. Experiment – there are no role models to follow, just your passions.
5. Be flexible and open to change: explore your options.
And to this list, we add a sixth.
6. Create a financial plan that is not just focused on eventual retirement. Instead, think about how you’re going to finance career transitions, and being able to take time out from work for renewal, restoration and re-creation.
If we live for longer, we must plan for longer. Start thinking when you make decisions, “What would my 90-year-old self like me to do?” And then create a well-considered plan to ensure that you have the money you need to enjoy your wonderful gift of long life.