We’re living longer. Here’s how that will change retirement

What excites you most about living longer?

“The opportunity to see grandchildren grow to a more mature stage of their life than prior generations did. Retiring healthily enough to be engaged in my extended family’s lives; time to contribute to my local community.”

This was one of the responses to a Pulse Poll from Mercer and the World Economic Forum for their recent report Living Longer, Better: Understanding Longevity Literacy.

A 100-year life is now within reach for many people, with children born today in middle-income countries having over a 50% chance of living for more than a century.

Life expectancy is increasing globally, according to the report. In the two decades between 2000 and 2019, it went from 66.8 years to 73.4 years.

Almost a third of the population of Japan (28%) is now aged over 65, while developing countries are expected to see a jump of 140% in over 65s by 2030, compared to 51% in more developed countries.

Those additional years of life will require a different mindset to our later years, ensuring we're maximizing our health and our chance at a healthy retirement.

The Pulse Poll found that while people value living longer, there are some genuine concerns. For instance, four in 10 polled want to have a better understanding for what their financial situation in retirement might be. Only 45% of people polled think they have saved enough.

Beyond finances, health was the top concern for 43% of respondents, with social inclusion and maintaining independence with dignity until the end of their life also featured in survey responses.

Ultimately, what’s needed is “longevity literacy” that goes beyond financial planning to empower people to live a healthy, resilient and sustainable life, says Richard Nuzum Executive Director, Investments, and Global Chief Investment Strategist, Mercer.

Haleh Nazeri, Platform Curator, Financial and Monetary Systems, World Economic Forum, agrees. “People will need to think differently, and more holistically, to fully prepare for their later years.”

The World Economic Forum and Mercer partnered on this report, the result of a 400-person pulse poll of their networks and communities. While this sample is not representative of populations as a whole, it does offer an important window into some of the issues shaping modern retirement and can kickstart new conversations for what is needed next.

“As individuals consider what is needed to be successful in a potentially 100-year life, they need to focus on three core principles: quality of life, purpose and financial resilience.”

The traditional three-stage life: education, career, retirement, is likely to become a “multistage life”, according to the report, with lifelong learning, career breaks and new occupations built into later life.

Here are some of the key shifts in retirement and recommendations for what three critical stakeholders – government, the private sector and individuals – can do to plan and respond accordingly.

What’s needed: Planning for good health will be even more critical, with individuals improving healthy life expectancy through good nutrition, exercise and early screening, while governments can introduce health campaigns to increase “health span”. Employers can offer high-quality and more accessible advice about longevity and health.

What’s needed: The “Bank of Mum and Dad” may be closing, with 45% of under-40s expecting they will need to support elderly relatives, compared to 32% of those over that age. Governments can strategize to increase the caregiving workforce and improve the financial rewards, while businesses can provide flexible work programmes and training for caregivers re-entering the workforce.

What’s needed: With more than half of people either having not saved enough for retirement or unsure, many people will either need to accept a lower standard of living or work for longer. Reskilling will be required to keep skills relevant to the workforce, with governments driving upskilling efforts and discouraging ageism.

What’s needed: The Pulse Poll found 44% of under-40s wanted to retire by 60. More educational programmes are needed from governments and employers to show the impact of different working arrangements and retirement ages on pay and pension. Auto-enroll pension schemes can ensure younger workers have more money saved