Instead of looking for ways to stay "young at heart," this generation of retirees might just end up staying younger, longer.
In his book The New Long Life, Professor Andrew Scott of the London Business School argues that the intersection of technology and longevity is going to fundamentally change how all of us approach life. Instead of a traditional three-stage journey from education to work to retirement, folks who stay healthier and more active as they age will have more power to shape and reshape themselves over multiple stages. This idea could have a profound impact not just on how you think about retirement, but on how your kids and grandkids approach their personal and professional goals.
"Investing in your future self."
Life expectancy rates have been rising steadily around the globe. In fact, the United Nations projects that in 2021, the number of centenarians is going to rise by nearly 600,000 people worldwide.
On a recent episode of Barron's Actionable Intelligence podcast, Professor Scott told my buddy Steve Sanduski that supporting your 100-year-old self creates a whole new set of challenges.
"If you are faced with a hundred-year life, and if you want to save enough for a decent retirement, you've probably got a 60-year career," Prof. Scott says. "And that notion of working from 20 to 80 just seems so undesirable. You'd just be bored and exhausted. Your skills probably would run out. Your sense of drive and purpose would run out."
In order to work longer and maintain that drive – potentially into retirement – Prof. Scott believes that we need to be constantly refreshing our skills. Not only will this help us fight off those feelings of boredom as we age, but we'll also be able to keep pace with any technological disruptions that might rattle our professions.
"One of the key things in this New Long Life is investing in your future self more and more," Prof. Scott says, "which is about making sure you've got options so that if your job does become redundant, you've got other skills and other ways to move. If you look at the economic analysis of what will technology do to the labor market, one is it's going to lead to jobs disappearing because of automation. But the other change is, actually, machines make workers more productive. There's no way you can get better at calculations than a machine. But what you can do then is think, What do my clients really need? It's actually understanding what their human needs are, how they respond. So focusing on developing your skills and your practice in that area I think is going to be key."
What's interesting about Prof. Scott's take on technology is that he sees opportunity where many other analysts see doom and gloom. Lifelong learners have never had more ways to reinvent themselves, whether through formal online education or the kind of informal instruction you find on YouTube and other sites. As technological advancements continue to open up new job opportunities, workers who do upgrade their skills sets will be able carve out unique career paths, whether they're just entering the work force or looking for new challenges in retirement.
For some folks, the multi-stage career will be a matter of practicality, a way of ensuring that their skills and experience are valuable no matter what kinds of disruptions are happening in the workforce. But for others – particularly workers who have the firm footing of a financial plan to support them – a multi-stage career will be an opportunity to stay curious and follow new passions wherever they lead. And for many seniors, the multi-stage career might change the very meaning of retirement. The "retired" engineer who transitions to a part-time teaching position might not think of himself as retired at all!
"A broad portfolio of assets."
Of course, work is just one component of the multi-stage life. Just as technology will keep getting better at performing certain jobs, tech will also improve our health care. We've seen a dramatic example of these advances in just the past year. Many experts believe that the mRNA technology that led to the COVID-19 vaccines will have far-reaching effects on how we treat illnesses going forward.
However, the best medicine will always be preventative, whether we're talking about our physical, emotional, or mental health. Prof. Scott believes that in anticipation of the New Long Life, we should start making investments in these areas as well.
"I think of it like a dashboard on a plane," Prof. Scott says. "You've got four dials in front of you. One is your finances. One is your productive assets, your skills and knowledge. The other is your vitality assets, which is your mental and physical health and your relationships. Then there's your transformational assets, your ability to deal with change. I want you to start thinking of those four different dials. If you just work for 60 years non-stop in the way that we currently do, your physical and mental health probably will be poor; your relationships certainly will be. If there is longer life, certainly with technology, you will see more change. Once you see these four different dials, you realize that the three-stage life can't survive. It's got to be a multi-stage life."
Investing in this broader group of "assets" that Prof. Scott identifies isn't just essential to a hundred-year life, it's essential to living an active, happy, meaningful life every step of the way. But these investments can also be the most challenging. You can't automatically invest in your long-term health and happiness the way you (hopefully!) make automatic contributions to your retirement accounts.
Investing in your most precious assets has to be intentional, whether that means finding a personal trainer who can help you reach your fitness goals or putting a weekly date night with your spouse on your calendar. And the bigger the investment, such as a major career change or moving to your retirement dream home, the more important the coordinated support of your financial plan is going to be.
"I think you've got to think about people investing in a broad portfolio of assets," Prof. Scott says. "It's not just investing in money, it's investing in your skills, your health, your relationships, and your flexibility. Healthy aging and productive aging is the key."
More from Prof. Andrew Scott:
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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