Why It Matters:
The financial professional’s emerging job is to not only manage money but help people prepare for a whole new phase of life.
Navigating this new retirement is a compelling opportunity for advisors.
It’s time to expand our definitions for “healthy living” and “saving for retirement.”
In the last century, the American lifespan has increased beyond any historical precedent. In 1900, the average life expectancy was 47 years old. Today it is around 78, and for certain demographics — such as women with a college degree — it is closer to 85. Younger generations may be in line for even bigger longevity dividends. It’s possible that an American born in 2007 can expect to live past 100.
A century of advancements in medicine, public health, and technology has given us an invaluable gift: more time. But the funny thing about time is that it’s never only a gift. It’s also a challenge. While old age is not new, an unprecedented number of people living longer and demanding to live better requires new thinking about retirement — which now constitutes decades, not just a few years, of life after work.
Some people actually fear longer lives — because they imagine more time merely means an elongated period of being “old,” with all the negative connotations that go with it. But old age, as I explain in my book The Longevity Economy, is made up. How we spend our longevity dividend is ultimately up to us. The new business of advice and retirement planning will be as much about successfully navigating these new years of old age as it is about ensuring financial security.
The new role for advisors
The emerging job of a financial advisor today is not only to manage money but to help individuals prepare for healthy living during an entirely whole new phase of life. But “healthy” encompasses far more than simply physical health. It is laying the foundations for continued engagement, social connection, and vibrant living in life after work. This nexus of health and wealth demands that advisors become conversant in longevity, not just retirement. Advisors who help clients navigate longevity will engage in conversations that span health and wealth, and have ready access to resources in a variety of domains that go well beyond today’s retirement planning, including:
- Making healthy choices throughout the lifespan.
- Thinking about mobility as a resource.
- Building social ties in retirement.
- Remaining engaged.
With older age encompassing a longer span of time than ever before, the decisions we make regarding our health have never been more important. How we eat, exercise, and take care of ourselves in our 30s (and 40s, and 50s, and 60s …) could have implications for our quality of life 50 years later. What does health buy us? Simple: the ability to do the things we want to do, when we want to.
Advisors who take the longevity perspective will engage clients in deep conversations about their health. For example, advisors will no longer accept a response of “good” to the question — how is your health? — as good enough. Does the client and his or her partner manage one or more chronic conditions that may be well-managed today but may present complications in older age that could treble average health-related costs?
A healthy lifestyle is only part of the longevity health-wealth equation. The other part is making sure our environment is congruent with our needs as we age. That means choosing to live where we will be able to get around without friction, even as our mobility declines. But the idea of choosing a livable community in retirement, or modifying the home to support aging in place, is not on the radar of many people who are planning for retirement, whether they hope to schlep down to the Sunbelt or stay where they are indefinitely (the latter is far more common, with about 90% of older adults hoping to age in place).
Advisors seeking to provide value beyond money management will initiate conversations with clients to examine the relationship between retirement location choices and quality living in older age. For instance, while a favorite vacation spot may be an attractive place to live in retirement for a few months, will it sustain a vibrant life for many years?
Keeping clients connected
There’s also more to healthy living than just moving and dieting. The upkeep of our social lives may be just as important to maintaining good health as the care we give to our bodies. Social isolation has been shown to have an impact on mortality equivalent to smoking and obesity — it literally kills us to be alone. Life after 65 is defined in part by a separation from the institutions that provide us with “built-in” social interaction: the kids’ soccer game, the workplace, etc.
Some older adults may need help simply finding places where they belong. Advisors can provide additional value by connecting clients to organizations that provide purpose and social connection. For example, referring clients to local community volunteer organizations, e.g., Habitat for Humanity. Or programs that provide both health and social connections such as SilverSneakers, an exercise program for older adults that has been shown to reduce isolation in its participants.
When we talk about “saving for retirement,” we might expand the definition toward any kind of resource that is necessary to live a good life — such as social relationships. As we age, it is in our best interest to accumulate and maintain meaningful relationships, so our later lives will be sparked with love, altruism, and companionship. Social involvement keeps us alive and thriving; it is also the key ingredient of a meaningful existence.
Navigating the gift of time
Part of preparing for longevity is thinking about what we will do with ourselves with the benefit of more time. For many, this could mean planning to work for longer than the hallowed (and totally outdated) cut-off point of age 65. There is a two-part motivation for working into older age: first, so our lifespan does not outpace our wealthspan; second, so we have a reason to get up in the morning.
I have spoken to many older adults who consider themselves “retired,” yet still go to work anywhere between two and five days a week to simply remain engaged in life outside their home and hobbies. One 82-year-old self-described “retiree” who works part-time as a construction consultant asked me rhetorically, “When you’re 80 years old, how much golf are you really going to want to play?” These individuals on the frontier of older age have oriented themselves toward a new phase of life, one which happens to be called “retirement” but doesn’t necessarily mean the end of work. Nearly 9 million Americans over the age of 65 continue to work full time, their number having doubled since the year 2000.
Moreover, “work” need not be for pay. The vast majority of the nation’s volunteer workforce are adults over 50 years old. Volunteer work can be even more rewarding than a professional position because while the volunteers may be adding a little structure to their lives, they also know they are providing value to their communities.
Advisors may find that introducing clients with similar interests or experiences will provide different types of value. First, advisors effectively become the center of a network of clients, not simply the managers of a book of business. Over time, clients may come to feel like they are more than clients but are also members of an advisor’s community. Second, clients will come to see their advisors as more than a source of financial expertise but as a trusted source of advice and support in navigating decades in retirement.
Are advisors ready to engage with clients across all the domains of longevity planning and preparedness? We are living longer and better than ever before. But our achievement in securing widespread longevity introduces new client needs and the responsibility of preparing for what is essentially a brand new phase of life in all of its facets. “Old age” is now a full quarter of the human lifespan. Unlike childhood, young adulthood, and middle age, older age in retirement has few models of what we are to do with all that time beyond golf, beach walks, and bike rides. There is a crucial opportunity here: a moment for advisors to fully embrace the role of helping people learn to envision and navigate the new retirement — a retirement made different from the old by better health, more opportunity, greater complexity and responsibility, and yes, more time.
Transamerica is a sponsor of MIT AgeLab.
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