Skipton Financial Services
Wednesday, February 20, 2019 - 11:26

Younger for longer

Rising life expectancy doesn’t just mean people are living longer – it’s set to completely change our personal and financial lives. To find out more, we spoke to Andrew Scott, co-author of the critically acclaimed book, 100-Year Life – Working in an Age of Longevity.

Life’s too short, or so the saying goes. But that’s less likely to ring true for your children and grandchildren.

Back in 1914, the probability of a new-born living to the age of 100 was 1%. Yet – due to improved healthcare, amongst other factors – a UK person born in 2007, or later, now has a greater than 50% chance of living to over 100^. This means that by 2107, centenarians will become the norm.

According to Andrew Scott, Professor of Economics at London Business School, this will significantly transform the conventional life stages we’re ingrained to follow. “On average, we’re living longer, and we’re healthier for longer,” Andrew stated. “And I cannot see how that can be anything other than good news. But of course it creates all sorts of challenges, and we need to adapt.”

To achieve a fulfilling 100-year life, Andrew believes the current traditional three life stages – education, working and retirement – will be re-structured to include multi-life stages.

No matter what stage you’re currently at, Andrew feels adapting to multi-life stages can prove fulfilling. “We encourage you to think about the broader portfolio – not just your financial assets, but also the intangible assets.”

Intangible assets come in three forms: your productivity assets are things that give you skills and knowledge. Your vitality assets are both you and your family’s mental and physical health. And finally, there’s your ability to change.

Andrew added, “It’s really important when you’re doing life-long planning, not just to think about how you make your finances stack up. You’ve got to think about investing in all of these assets.”

How will people manage their finances going forward?

Andrew argues flexibility will be the key – particularly in accessing your savings. “If you think about the traditional three-stage life, you’re just building up your assets for when you retire and then you want to run them down again.

“When it comes to multi-life stages and if you think about career breaks, you’re going to want to have access to your assets earlier than that.”

And planning for retirement? “If you think you might be working after retirement, it also changes your attitude towards risk.” Andrew explained. “Because if you still have access to wages, which tend to go up with inflation, you can bear a bit more risk in your portfolio, as you’ll be working for longer.”

A world of possibilities

The conclusion Andrew and co-author Lynda Gratton reach in the book is that – although individuals, companies and governments face significant changes adapting to a longer life – it’s a very exciting time for all of us.

Andrew concludes, “Longevity is about all of life – not just the end of life. We can do things differently at any stage, that’s where the opportunity comes in. It’s not just about investing in your finances. It’s about investing in your health and your relationships.

“What’s really happening is we’re younger for longer. And I can’t think of anything more positive to say than that!”

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