Longevity: Business Imperative; Benefits Opportunity
What does it mean that adults today are living on average 10 years longer than their parents and 20 years longer than their grandparents? By 2050, one in four people in North America will be over the age of 65, compared to fewer than one in five today. This demographic trend has implications for government and businesses in terms of economic growth, but also for spending for health care, pensions, training and education. Last year S&P released an analysis stating that, if measures are not taken to curb the costs of aging, government credit ratings in roughly half of the world’s largest economies will have been downgraded to junk by 2060, up from the current level of around a third.
The bottom line is that, for the economic math to work, our increasing lifespans require a corresponding increase in time spent working and in good health. The good news is that this is entirely possible. Not only are people living longer than prior generations, but they are physically and cognitively able to work longer as well. The challenge is to make working longer something to be desired.
It’s time to begin addressing the longevity challenge – and opportunity – in benefit strategies for the short term and long term. Here are the areas where a focus on longevity can make a real difference:
Health and wellness is a key pathway to longevity opportunities: People who stay healthy as they age provide more years of productive work and put less pressure on government programs and healthcare systems. Many older workers leave the workforce early because of an unexpected decline in health. A study by the Employee Benefits Research Institute found 4 in 10 workers reported retiring earlier than planned, and a third of those cited a health problem or a disability as the reason. In thinking about your program offerings, consider that people with a chronic condition that is under control as they enter their 60s have a higher chance of making it to age 70 than if the condition is not managed. Cancer screenings also become more important as we get older, since many cancer risks increase with age.
Financial planning during working years is critical to ensure a comfortable retirement. A report released by the World Economic Forum found that people in the US will outlive their retirement savings by about a decade, with women at higher risk because of pay gaps, career breaks, caregiving, and a longer life expectancy. Workers need help filling the savings gap to enable a successful transition into retirement and reduce pressure on families and government systems. In addition to traditional retirement income benefits, offering or subsidizing supplemental insurance such as long-term care and critical illness coverage can provide vital financial support. Employers can communicate and support smart financial practices for every stage of life and encourage workers to begin retirement planning at an earlier age.
Training and upskilling extends working life, maximizes squeezed labor pools and helps people remain engaged and productive during longer careers. In a Mercer survey of 160 global employers, only about half said they provide career and skill development to older employees, so this is an opportunity area. Cultivating age-diverse teams allow experienced workers to train/mentor less-experienced workers. This works both ways – younger workers can share valuable skills and new ways of thinking with their more senior colleagues.
Flexibility can be the key to enable working longer by using new, age-appropriate models for later life working, including phased retirement. About two-fifths of the companies in the Mercer survey offer a structured phased retirement program, which allows people to continue working beyond the retirement age but cut back on the number of hours worked. For those who aren’t ready to stop working but would like more time to spend with family or pursue passions, phased retirement may be a valuable option.
In the survey, two thirds of companies said they are publicly committed to being supportive of employees at all life stages. Given the growing imperative to cultivate older workers, all companies will need to get on board, and those that have already begun putting programs in place will undoubtedly need to do more. At Mercer, developing solutions for supporting longevity in the workplace is a key focus. Watch this space for more of our research and best thinking, including reports on how different industries can and are addressing this critical issue.
