Life expectancy at birth now exceeds eighty-three years in Japan and is at least eighty-one years in several other countries.  Research suggests that life expectancy is increasing so fast that half the babies born in 2007 will live to be at least 103, while half the Japanese babies born in the same year will reach the age of 107!  (Boseley).

The U.N. Population Division projects that people older than age 60 will increase from just less than 800 million in 2011 (11 percent of world population) to more than 2 billion in 2050.  That is, by 2050, almost a quarter of the world population will, by today’s standards, be “old”.

The Bad:

  • Old people must be taken care of. This could result in a huge financial burden for young families who will simultaneously be trying to succeed on their own toward meeting their own lifestyle expectations.  Imagine the pressure on the young, trying to support the old, when advances in technology / artificial intelligence (AI) are predicted to leave behind an ever-growing rate of world unemployment.  Already, some of the most advanced first world governments are said to be predicting the need for massive social funding to finance increasing unemployment numbers.  This kind of funding will only be achievable with major increases in the taxation of multinational technology and AI companies?
  • “Based on our calculations, pensioners require R 20,500 per month for essential expenses, including frail care, to rent in a middle-market retirement village (Twané Wessels, Product Actuary at Just Retirement Life).
  • … compared to R 37,000 per month to stay in their home with 24-hour private home care,” (Twané Wessels, Product Actuary at Just Retirement Life).
  • At a living annuity draw of 4% (currently being recommended) such a person would need capital of:
  1. a) just over R 6m invested to fund option 2 above;
  2. b) and just over R 11m to fund option 3 above.

The Good:

  • Financial planning…financial planning…financial planning! Start saving for your retirement as early as possible.
  • Work for longer…even beyond “3 score years and ten”?
  • Work cleverer and not necessarily harder. If possible, negotiate a piecemeal retirement arrangement with your employer.  For example, after 65 years old reduce your work commitment to 3 days a week, then 2 days a week.  Alternatively negotiate longer holidays.  Be prepared to have your earnings reduced accordingly.
  • Work hard at relationships with family and friends. It has been proven that this results in a happier, longer life. (http://www.ted.com/talks/robert_waldinger_what_makes_a_good_life_lessons_from_the_longest_study_on_happiness).
  • An extended “sell by” date: older folk, often with skills and capabilities that come from the many years of experience, are able to make significant contributions to businesses and society in general well beyond the traditional retirement date.

The “Not-So-Ugly”:

Carefully identify your hopes, options and plans for the future.  Then visit your financial adviser to establish how to reach your goals or to what extent these options are attainable.