A new report from Scottish Widows predicts that a third of babies born today will live to be 100 and, as a norm, will work until the age of 70. Girls are more likely to reach this age – 39 per cent – compared to boys (32 per cent).
There’s something of a fairy-tale quality about the phrase “living for a hundred years” and thinking about the implications shows that a good fairy with a magic wand might be required for ensuring a long and happy life for today’s babies who are going to experience such longevity.
The report anticipates that as people face the challenge of saving for their first home and paying off student loans (which at around £73,000 will take until average age 52), ‘an increasing proportion will either have no children or just one child’.
They will also need to find money to save for a pension and to continue to work longer in some capacity in order to fund living comfortably for the longest anticipated retirements in history – up to three decades.
Naturally (as it comes from a financial products provider) the report’s main message is that these ‘new centenarians’ will need to start saving at the age of 25 to build up a decent pension to have any chance of being able to retire comfortably.
However, surely it is simplistic to think that this will be sufficient to deal with a change of such magnitude? It seems to me that innovation will be required in a number of areas, including:
· Housing – in terms of both assisting younger people to get on the housing ladder, and more flexible options for helping older people free up housing equity.
· Education – a review of our current ‘university education at any cost’ culture and a greater emphasis on life-long learning
· Working patterns – making part-time, flexible and contract roles throughout the career-span the norm, thereby enabling people to dip in and out of the workplace more easily – and to extend their working lives.
· Spending patterns – a review of priorities e.g. although divorce rates remain high it is predicted that young centenarians will spend around £39,000 on their wedding (compared to their grandparents average of£4,400)!
· Attitudes to healthy living – to ensure that those later years are spent in some kind of good, or at least moderate, health.
Commenting on the report, leading economist and trend forecaster Steve Lucas of Development Economics suggests that today’s parents “should encourage their children to start understanding finance and stress the importance of saving from a young age”.
This sounds a worthy strategy but might it be undermined by the reality of today’s parents neither understanding financial matters sufficiently themselves, nor having the ability and/or will to save for their own old age?http://reference.scottishwidows.co.uk/docs/2012_11_new_centenarians.pdf
However, before anyone becomes too smug or complacent, other indications suggest that the pensions industry is already planning for anticipated life spans of 125 years!