Like previous pandemics, COVID-19 has touched off profound changes for our societies, economies, workforces, and overall life models, not least of which are people’s shifting expectations for later-life work, purpose, health, and finances. Bank of America’s Lorna Sabbia and Surya Kolluri recently explored these trends in a wide-ranging discussion on the emerging shifts and signals that people are rethinking the period once known as retirement.
COVID-19 has accelerated many of the trends that were already challenging the outdated study-work-retire model, as individuals and families, financial services institutions, and policymakers grapple with the issues — and explore the opportunities — of funding lives that now routinely stretch for twenty, twenty-five, or thirty years after traditional retirement age. As you might expect, many people are now feeling less secure about their finances and future medical costs due to the pandemic, which has upended key industries, challenged health systems, and generated trillions of dollars in economic impacts.
However, there is an even deeper shift playing out in our societies, which has been underway for at least decade linked to the profound transformation of longer lives and more old than young across society. The trend is formally built into formal endorsement through the Decade of Healthy Ageing, recognized by Fortune 100 corporate leaders such as Bank of America in their commitment to healthier longevity. These shifts already embedded in the Decade of Healthy Ageing are further prompted by COVID-19 from which tens of millions of older adults have been reflecting on what they want to get out of their later years. They are rejecting outdated notions of retirement but instead asking how they can continue to lead productive, purposeful, healthy, and financially secure lives for decades after 60. This broad shift in mindset may be one of the most enduring legacies of the pandemic, helping to permanently retire the 20th-century notions of retirement that were on their way out even before COVID-19.
While there’s still a long way to go to control and end COVID-19, some fundamental lessons are emerging for how people and institutions can reinvent retirement in the post-COVID era:
· Planning for a full century of financial and healthcare needs. As Bank of America’s experts highlight, people must consider how they will fund living expenses and healthcare costs across the full span of modern longevity. For example, a healthy 65-year-old couple has a fifty-percent chance that one of the partners will live to 92 or older. It’s perhaps no surprise, then, that just 14% of Gen X is confident that they are saving enough for lifetime healthcare costs. To meet their needs, people need to consider their own longevity-informed roadmap, with a combination of saving, investing, and working longer, supported by innovative financial vehicles and education.
· Addressing the gender gap in investing and saving. Women, on average, live significantly longer than men, yet they also face a “pay gap” and work interruptions that mean a woman at retirement age may have earned a cumulative $1,055,000 less than a man. Addressing this disparity requires increasing financial empowerment among women, as well as solutions to mitigate or avoid work interruptions, often due to family care — including supportive employer policies and professional home care.
· Extending “health span” to equal life span. Bank of America’s research has highlighted that there is currently a 10-year gap in the U.S. between the average lifespan versus the average “health span,” or the number of years lived in good health. New healthcare innovations, especially better treatments for Alzheimer’s and other age-related conditions, can help to close this gap, so people can enjoy all of their later years. Elder caregiving is a critical path for this particular challenge and a model for enabling healthier aging generally. This can also help people to work for longer, launch second careers, or start their own businesses — providing additional income and continued activity and engagement in a virtuous cycle.
· Expanding the silver economy. People are increasingly rejecting the idea that aging should mean they retire, become less active, and disengage from their activities or communities. Instead, they want their later years to be purposeful and even profitable. This opens new opportunities for the $17-trillion global silver economy, which can empower older adults as both employees and consumers, while driving the post-COVID recovery with products, services, and innovations designed for the needs and interests of this huge market and pool of talent.
These key tenets point a path forward for rethinking retirement during and after the COVID-19 pandemic. By shaping individual expectations, market offerings, and policy for the dynamics of longer lives, we can step forward into a healthier and wealthier world for decades to come. It’s a conversation that can find national and global actions in the UN/WHO Decade of Healthy Ageing, itself the single most transformational policy framework for healthier longevity.