15 Jan 2024
Increasing longevity poses significant questions for the world – including the length of working lives and the type of support needed for a healthy and secure retirement.
First published by the World Economic Forum here.
More people are living longer and birth rates in most of the world are well below those needed to maintain a stable population. Increasing longevity is a sign of great advances in society, health and technology. But, it also poses profound questions for governments, communities and individuals, as well as employers considering the ways they attract, retain and retire the workforces powering our economies.
In collaboration with Mercer and the World Economic Forum, industry leaders have developed six principles for the longevity economy, these are:
1. Ensure financial resilience across key life events.
2. Provide universal access to impartial financial education.
3. Prioritize healthy ageing as foundational for the longevity economy.
4. Evolve jobs and lifelong skill-building for a multigenerational workforce.
5. Design systems and environments for social connection and purpose.
6. Intentionally address longevity inequalities, including across gender, race and class.
Key actions for employers to protect their workforce
According to the World Bank, approximately 65% of adults globally are worried about having enough money for normal monthly expenses. As life expectancy increases, individuals need to ensure that they have sufficient savings, for their present, as well as their future.
Financial worries are highly correlated with psychological distress, which impacts an individual’s wellbeing and their ability to perform at work. Financial education and support from employers are vital, for the employee and the employer.
Lifespan and 'healthspan' are two distinct concepts. Employers and employees must prioritize healthy ageing that supports a longer working life and a higher quality of life in retirement. The US Integrated Benefits Institute estimates employers incur $575 billion a year in lost productivity from staff sickness and health typically suffers more deeply into old age.
As the ageing population puts more pressure on health and care services, greater emphasis is needed on prevention rather than intervention. Research by the Centers for Disease Control has shown that loneliness is also linked to poorer physical and mental health. Retirees are especially vulnerable, as they are removed from the social environment of the workplace.
There is an estimated $5 trillion in potential economic output from employing older workers, according to the McKinsey Health Institute. An ageing population means the ratio of workers to retirees is falling. While the competition for talent is becoming fiercer, many older adults who wish to work are unable to find a job.
In response, employers need to explore ways of reskilling employees, some of whom will be at later stages in their careers. Successfully doing this will require a change in workplace culture for older workers; multiple benefits are to be gained, from alternative perspectives and fresh ideas from outside cultures and industries, intergenerational knowledge transfer and reduced turnover.
Greater focus is needed from employers to overcome systemic barriers across gender, race and socioeconomic class to ensure equitable access to health and retirement outcomes across entire workforces. Women, racial minorities and those from lower-income backgrounds face systemic obstacles that may make it more challenging to save for the future.
This exacerbates inequalities in retirement and perpetuates inequality across generations. Women are still much more likely to take on carer responsibilities, leading to lower retirement savings, despite women’s typically longer lifespans. Additionally, troubling connections persist between income inequality and disparities in life expectancy.
Embracing challenges through action
Opportunities and challenges for employers in the longevity economy
- Increasing lifespans present several major funding concerns for individuals, including access to healthcare, periods of being a caregiver or needing care and the sustained affordability of retirement.
- Private sector employers are set to play a crucial role in enabling longer careers for those who would like to work longer, through more flexible employment opportunities.
- Financial education and access to suitable savings, investments and insurance vehicles are vital to supporting workers as they plan for a healthy, happy and long retirement.
- Increasing inequalities between health and wealth outcomes must be actively addressed to improve the retirement prospects of less advantaged socio-economic groups.
Proactively addressing the realities of the longevity economy brings many profound benefits to society, whether in a more productive and engaged workforce, a healthier population putting less strain on social systems or more people enjoying longer and less stressful retirements and contributing to the communities around them.