Corporations Prepare to Collect the Longevity Dividend

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Corporations Prepare to Collect the Longevity Dividend

The motto of Trends might as well be: “Demography is destiny.”  It’s a truth, which strategists ignore at their peril.

As we forecast to clients more than thirty years ago, across the globe, people today are living longer.  Whether it is in the United States, China, or Rwanda, average human life expectancy has increased over the past few decades.  Furthermore, we’re not only raising the median and mean “healthy life span,” but new discoveries are finally impacting maximum healthy lifespan.

Simplistically, if life expectancy continues to grow at the rate of two to three years every decade, as it has done over the last 150 years, then a child born in 2007 will have a more than 50 percent chance of living past their 100th birthday.  In Japan, the number would be 107.  By mid-century, death and incapacitation from cancer, diabetes, heart disease, dementia, and most infectious diseases will largely vanish from the affluent world—and, the resulting increase in longevity will transform how people manage their work lives and careers. 

For instance, rising life expectancy means the level of savings required to provide a reasonable income for retirement at age 65 is becoming increasingly infeasible for most people.  Given the average level of savings in advanced economies, most people currently in their mid-40s will need to work into their early to mid-70s; meanwhile, most people currently in their 20s will be working into their late 70s, and many, well into their 80s.

Across the world, people are becoming more conscious of their lengthening working lives, but more frustrated by their working context.

New research by Professors Lynda Gratton and Andrew Scott of London Business School suggests that while people know they will have to restructure their lives and careers, corporations are unprepared.1  Indeed, corporations have been somewhat inconsistent in their reaction to greater longevity.  On the one hand, many executives are excited about the possibilities of tapping into the estimated $15 trillion per year global spending power of people over 60 as soon as 2020; on the other hand, few have carefully considered the opportunities and challenges longevity brings to their own workforces.  In the December 2016 issue of Trends, we examined many of the public policy implications.  However, the consequences for private sector firms could be just as big.2

Most companies, especially those operating in the advanced economies, still view life in terms of three stages:  full-time education, full-time employment, and then a “hard stop” retirement around the age of 65...

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