Living longer – what does it mean for work, health and finances? 

  • Author
    Yvonne Sonsino
    Total Well-being and Longevity Lead, Mercer Marsh Benefits

Findings from the Mercer Global Workforce Longevity Practices Survey - strategies to create an inclusive and supportive environment for employees of all ages.

By 2050, the population of people aged over-65 is expected to double, reaching 1.5billion worldwide.[1] In fact, people today are living 20 years longer than their grandparents did.[2]

While these strides in longevity are a remarkable achievement, the reality is that an aging population creates profound and multifaceted risks for global economies, countries, employers, and individuals.

Longevity in numbers

  • Currently, 1 in 11 people are aged over 65 and by 2050 it will be 1 in 6.[1]
  • People worldwide risk outliving their retirement savings within 8-20 years, with women the worst affected.[2]
  • Only one third of adults around the world are financially literate.[3]
  •  Approximately 1 in 2 people would exhaust their savings within a month if their income stopped.[4]
  • 1 in 5 individuals over the age of 55 wishes to work, but faces barriers in finding employment.[4]

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The challenges of living longer

  • Retirement savings gaps
    One of the greatest longevity risks is the financial gap that people will inevitably face in retirement, which is predicted to be around £400trillion by 2050.[4] The longer people live, the more pension provision they will need, and adequacy levels need to be urgently addressed. The younger generation typically prioritize career growth over retirement savings, which is storing up issues for public systems in future as gaps become more severe.
  • Higher social healthcare bills
    An aging population places more pressure on governments, who will face rising social care bills, and the challenge of supporting people who are too old to work but have little to live on. At the same time, birth rates across the globe are falling, which ultimately means fewer working-age taxpayers per retired person. Take Japan, in 2020, researchers projected Japan's population to fall from a peak of 128 million in 2017 to less than 53 million by the end of the century, meaning much lower capacity to raise funding via the working population.
  • Gender pay gap
    Across OECD countries, the gender pension gap is running at 26%. A key contributing factor to this is that women live 6-7 years longer on average.[2] Women are also more likely to take career breaks, not just for childcare, but for caring for older relatives too. Research shows that there are already more than 63 million carers internationally.
  • The challenge of retirement ages
    Governments across the world are trying to address normal retirement ages, however increases are extremely unpopular with electorates. In Denmark, for example, the current retirement age is 65 and a half, but this is changing to 74.[3] This leaves people working for far longer than they might have expected, often in work environments not set up for older employees.
Individuals are expected to outlive their savings across the developed world by around about ten years on average. And this is one of the most severe and significant implications of living longer.

What does this mean for employers?

As longevity increases, businesses must adapt quickly, re-evaluating workforce strategies, financial planning, and organizational structures.

  • Two thirds of companies brand themselves as supportive of employees at all life stages

    Mercer Global Workforce Longevity Practices Survey

  • Yet almost two fifths do not embrace age as part of their DEI strategy.

  • Workforce dynamics
    Talent shortages are exacerbated by ever-longer retirements and decreasing birth rates. The older workforce, often eager to continue working, face employment barriers which businesses must overcome. Incorporating multigenerational policies and flexible retirement plans is not just beneficial but essential.
  • Age discrimination
    Despite a wish – or need – to work longer, many older people are struggling to find employment. For instance, nearly 80% of U.S. older workers have experienced age-related discrimination.[5] Dispelling myths about older workers’ inability to learn or adapt is crucial.
  • Discriminatory pensions design
    Pension design is often discriminatory, with thresholds which leave out lower paid workers - often women who are working part time to fulfil caring responsibilities. Women also tend to have different attitudes to investment, taking less risk, which can have a negative impact over the longer-term.
  • Brain drain
    There are many industries facing a significant brain drain as large cohorts of employees retire. For instance, we typically think of the technology sector as a very young industry, but as systems and products mature, the need to keep experience is becoming increasingly important. We’re working with our clients to look at how we incentivize people to stay in the workforce for longer, which may mean pension or retirement enhancements, improved flexible working conditions, better medical programs, opportunities for sabbaticals, and training or upskilling.

Addressing longevity challenges – six strategies for success

Nutrition, preventative medicine, early detection, quicker care, faster return to work… as employers, we can facilitate all of these things. They make sense for us, not just at a business level, but at a national economic level.
To address these risks, organizations and governments must develop comprehensive strategies that support individuals across health, wealth and career. Mercer has collaborated with the World Economic Forum to map out six steps employers can take to unlock the potential of the longevity economy.
  1. Ensure financial resilience across key life events
    Nearly 40% globally face financial instability after unplanned career interruptions, including career breaks, illness or unexpected retirement. Equitable access to resources, insurance, savings programs and strategies are crucial to support financial resilience.
  2. Provide universal access to impartial financial education
    One third of HR leaders do not believe their employees are prepared for short-, medium- and long-term financial shocks. Employers can help to lay a strong foundation for financial literacy and decision making by developing accessible, universal financial education programmes for all.
  3. Prioritize healthy aging as foundational for the longevity economy
    As longevity increases, we are likely to see more people living in poor health or with chronic conditions. Employers can help tackle this by encouraging preventative healthcare, emphasizing nutrition, and providing comprehensive benefits that help workers to maintain good health throughout longer lives.
  4. Evolve jobs and lifelong skill building for a multigenerational workforce
    Employers must continue to reskill all generations of the workforce, providing training opportunities and work design that supports this. Our research shows that at least half people in later life careers are ready for the next challenge. And they'll have to be able to stay at work and finance their own longer lives. Business must therefore foster environments that encourage lifelong learning and re-skilling opportunities across generations.
  5. Design systems for social connection and purpose
    Social isolation and loneliness are growing worldwide public health and public policy concerns. Employers can help by creating communities, networks and opportunities for employees to come together and share social connection. This will also help to mitigate the health risks associated with isolation.
  6. Intentionally address longevity inequalities, including across gender, race and class
    Age discrimination is still rife, yet it is an area that is largely ignored in the diversity, equity and inclusion agenda. In terms of pay progression and promotion there is often a plateau as people get older, which is something that employers can address. Equally, employers can help address the gender pensions gap by ensuring that pension designs are equitable. They should also advocate for policies promoting equal opportunity and career progression for all genders and ages.
Workplace flexibility is also vital. Businesses can retain key skills and talent by developing flexible work models that allow for phased retirements. This means that employees can stay in the workplace whilst also caring for older relatives or needing to wind down gradually.

What do ‘disruptor’ companies do differently?

Our research shows how companies with enhanced financial performance are dealing with longevity risk.[6]

  • 85% retain experienced employees.
  • 74% understand their age profile and impact on critical jobs.
  • 63% construct multi-generational teams to harness varied perspectives and talents.
  • 62% audit policies and practices to check for potential age discrimination.

Global Workforce Longevity Practices Survey: How to thrive after 50

Learn how global employers are creating an inclusive and supportive environment for employees of all ages.
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About the author(s)
Yvonne Sonsino

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