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December 29, 2021
If the average life span increases to 100 years or more, future generations may need to work longer – much longer – to fund the increased longevity. Some experts estimate that today’s children and teens will be working for 60 years or more. They might not be able to enter retirement until they are 80 or 85.
How does that sound to you? Without a change to our work culture, it might be awful. However, if history repeats itself, we may see an evolution of work systems to adapt to longer lives.
Let’s explore the past, present and future of work.
Retirement is a relatively new concept. Up until the late 1800s people would work until they physically could not any longer and then hope that family could help them for the remainder of their lives. People typically worked up until less than 2 years before they died.
Social Security was introduced in the 1930s, making retirement more financially feasible. (However, it was only initially meant to fund a few years of retirement — not 20 or 30.)
According to Gallup, the average retirement age is currently 62. At this age, we are working about 40 years and enjoy approximately 20 years of childhood and 20 years of retirement. There are pros and cons to this system:
Pro: Relatively stable, usually increasing income over your lifetime.
Con: Not even 40 years of work is adequate for most people to fund 20 years of retirement.
Con: The highest earning years often overlap with parenting and caring for adult parents causing major stress in midlife. (Learn more about the U curve of happiness and combating financial stress in mid life.)
Con: Retirement years can be underutilized. If people weren’t burnt out, it is likely that some level of work would be enjoyable and rewarding well into what we currently consider “retirement years.”
According to the Stanford Center on Longevity, “In the United States, demographers predict that as many as half of today’s 5-year-olds can expect to live to the age of 100.”
This shift in lifespan will likely herald new conventions for work and retirement. A few possibilities:
This is happening. More and more people are switching to part-time work before fully committing to retirement.
The pressures on people in mid life can be overwhelming. The peak earning years coincide with the time when people are juggling raising children, funding education expenses and supplementing the needs of aging parents.
Parental and family leave policies could be one solution. And, some companies, wanting to retain their mid career employees are embracing policies of radical flexibility with shortened work hours and schedules.
Sabbaticals – long breaks in your career – could become more common.
And, it is likely that working from home will continue to be an option.
Job sharing – when two people share one job – enjoyed some popularity during the early 2000s. It could be a solution for people wanting to spend more time with family in mid life or as they slide into retirement.
The Federal government has been discussing the possibility of delaying the age when you can start Social Security benefits. Our increasing life spans translates to a heavy financial burden on the system as benefits are paid for more years than was conceived when the guidelines were put in place.
By increasing the start age from 62 to something older, the government would be encouraging people to work longer while also maintaining the solvency of the program.
It is possible that in the future we will require fewer humans to keep the wheels of commerce churning. McKinsey Global Institute predicts that one quarter of the workforce will lose their jobs to automation by 2030.
Proposals to combat a future with less work have included universal basic income and shortened work weeks – 30 hours instead of 40, for example. So, you might work for more years, but fewer hours per week.
According to analysis in Forbes Magazine, the ranks of the self-employed are exploding. Whether this is due to the pandemic or a more general trend remains to be seen, but having control over your own work could be a viable solution to long term burn out.
And, it turns out that over 50 is a great time to be an entrepreneur:
One goal of financial literacy is to help people understand how to fund their entire life – especially without working up until death.
Increasing lifespans will demand that people become more financially literate.
How can you do that? The NewRetirement Planner is a personalized tool to help you take control of your money. NewRetirement is not about one “right” answer. We are all about what is right for you — your values, your resources, and your goals.
For people who want clarity about their choices today and their financial security tomorrow, NewRetirement is a financial planning platform that gives people the ability to discover, design and manage personalized paths to a secure future.
Our goal is to make high quality low cost financial guidance available to everyone. More than 155,000 people representing more than $168 Billion in wealth currently trust the system to make the most of their money and time. The platform can be co-branded or white labeled for partners. Additionally, the company provides API access to companies who wish to embed planning functionality within their own site.
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