Living longer, but not necessarily better
I passionately believe that financial planners have an essential role to play in advising clients on their general well-being, rather than just their financial stability. I was delighted to find my approach affirmed by the research findings of renowned Oxford professor, Sarah Harper, when I recently attend her seminar.
Trends in ageing
Sarah Harper, Professor in Gerontology, and Director of the Oxford Institute of Population Ageing, Oxford Martin School, shared some startling new findings regarding the social implications of demographic changes around the world in her presentation entitled .Rethinking Global Ageing.
According to a UN report released in October, 2012, within a decade, the number of people over 60 will exceed one billion. For the first time in history, population growth is being driven by increasing longevity rather than by fertility rates: older people are living longer, younger people are having fewer children.
The UN report estimates that one in nine people around the world are older than 60, and states that the number of older people worldwide is growing faster than any other age group. This increasing proportion of older people is a consequence of success – improved nutrition,
sanitation, healthcare, education and economic well-being are contributing factors.
The implicit warning is that the world will have to start planning now for the impact of a rapidly ageing population.
Whilst respiratory illness was a major killer of older men in the 19th century, very few deaths now result from this disease owing to advances in medicine. The same applies to infections, so this is good news for retirees. However, the costs associated with killing these illnesses are going to continue increasing. The incidence of cancer has risen as a result of lifestyle factors such as poor diet, lack of exercise, alcohol abuse and smoking.
US life expectancy is lower than expected, says Professor Harper, given their economic wellness – obesity is certainly one of the villains here. “We have a consistently increasing number of unhealthy and obese people entering older age who are dependent on drugs and medication to manage their ailments. They are not willing to make lifestyle changes, but rather turn to medication,” she warns.
From a broader perspective, Harper says the increase in the total amount of ill-health and disability in the population will exert pressure to increase total health care spending. The change in the type of ailments will also present challenges to those providing care for the aged.
Adapting to the changes
The key challenge of this demographic shift is for society to adapt to the changes.
Of vital importance, says Professor Harper, is “the capacity of individuals and households to make relevant adjustments to savings behaviour, labour productivity, family intergenerational
transfers and investments in their own human capital; and, the capacity of institutions to make the relevant adjustments to enable these individual and household adjustments.”
People must not just to ensure they will be financially secure for longer, but also to be as healthy as possible – physically, emotionally and mentally – before and during the retirement years.
Gender differences in longevity
Professor Harper’s research confirms the fact that, generally, women will outlive men. Women’s immune systems, says Harper, are better at fighting off viruses and bacteria (apparently, the “man flu” myth is true – men really do feel worse when they are sick!).
In terms of hormonal activity, the female hormone is protective, while the male hormone is not, and may even enhance morbidity and mortality. According to Korean research, cites Professor Harper, eunuchs lived on average on average 20 years longer than their “more masculine” counterparts (the men in the audience seems willing to forego the 20 years!).
Will we all enjoy the benefits of longevity or will it only be for a few? The sad news is that there will be more inequalities. There is evidence of differential longevity: the retiree who had a low-income and unhealthier lifestyle has an average life expectancy of 12 years after age 65; their wealthier and healthier counterparts had a life expectancy of 23 years.
There is further evidence that the trend of an ageing population is leading to a division between government responsibility (public money) to keep the general population out of ill health
and poverty, and individual responsibility (private money) to raise personal standards of living and quality of life.
Healthy living across the span of one’s life clearly makes an impact in old-age, and education at an early age in crucial. Lifestyle choices become crucial in maintaining a healthy body and mind: smoking, exercise, eating.
Will advances in life expectancy be matched by advances in healthy life expectancy? Various studies show that that healthy life expectancy is increasing – a good thing, says Professor Harper, as, we will have to keep people contributing to labour and the economy.
The “dependency ratio” myth is weakened as healthy and productive people approach retirement age (which is shifting all the time). We encourage those approaching retirement to continue working as long as they can, health-allowing. They can create a new career or work part-time or volunteer, but they must continue to experience a sense of purpose and usefulness. This has a tremendous impact on their health and well-being.
As a Financial Life Planner, I derive enormous satisfaction from spending time with our clients, and exploring ways in which they can live healthy, holistic and happy lives following retirement.
Research has shown that the well-being of the older generation contributes significantly to the well-being of the population as a whole … and the financial planner has a crucial role to play in making the centarian challenge a positive one!