In 1950, there were roughly 130 million people aged 65 and over in the world. By 2015, the size of this age cohort had grown fivefold to reach 600 million globally. This number, according to the United Nations, is set to expand further to nearly 1.6 billion by 2050.

Living longer, working longer?

There is good news that an increasing number of countries are realising the importance of the longevity dividend by continuing to engage older workers in the labour market. In the US, for instance, the Bureau of Labor Statistics projects that twice as many Americans aged 65 and over are likely to remain in employment in 2024 than in 1985. In the UK, the Office for National Statistics estimates that workers aged 65 and older will be responsible for more than half of all UK employment growth by 2030. The major reason for this phenomenon is largely attributed to the higher level of education of the older workers, who not only can continue to contribute to society (and to their old-age pension) because they want to, but also because they can keep working due to better health conditions.

Ageing and ageism
However, it is an undeniable fact that many older workers face greater challenges than those of prime working age (between 25 and 54 years old according to the clarification by the International Labour Organisation) when it comes to recruitment or access to career development opportunities. In times of economic recession, they are also more likely to be let go with an early retirement package. Defined by the United Nations Economic Commission for Europe as the stereotyping and discrimination against people based on their age, ageism is real. In fact, it is one of the major barriers to longer working lives.

For example, the 2018 PricewaterhouseCoopers Golden Age index has revealed that the Organisation for Economic Co-operation and Development (OECD) could increase its total gross domestic product (GDP) by around USD 3.5 trillion in the long term if the group of 36 member countries merely raise the employment rates of those aged over 55 in their countries to match that of New Zealand, which was ranked second only to Iceland in the survey. More specifically on a country level, it has also emerged that the US, Germany and Greece could experience a long-run boost to their GDP by 4.4%, 10% and 22.8%, respectively, if more people aged 55 and over could continue to remain in the workforce.

What are the consequences on pension systems and spending patterns?
The rise of the human tide in the form of ageing and the presence of ageism will inevitably exert stress on pension systems around the world. It is therefore important that every country strikes a balance between ensuring the adequacy of old-age benefits for its citizens, regardless of their gender, and the long-term sustainability of its pension systems. After all, many older people tend to rely on their pension assets and savings to fund their daily life expenses.

However, it is also precisely because pension monies have become one of the major sources of income for the elderly that they have greater spending power than younger generations. As data from the United Nations shows, nearly 70% of the people in the world receive a pension, and the overwhelming majority of them can be found in North America and Europe. The spending power of our seniors is further enhanced given that they are freed from the constraints of raising a family and can thus dedicate greater financial resources and time for themselves.

Financial planning: preparing better!

The prospects of financial planning relating to extended longevity should remain bright. When retirees embark on a new stage of their life, they want to spend time with their loved ones, travel around the world, take up new hobbies, or simply enjoy their autumnyears in peace. However, not all older adults are finally prepared for a cessation of employment.

Life Insurance
Many working-age adults are situated in an economically active phase of their life that carries major responsibilities like marriage, buying property, paying home mortgages, or starting a family. By contrast, retirees tend to have other responsibilities since they may still have dependent spouses, heirs, or other commitments in addition to affording themselves with financial independence. Although most people want be able to enjoy their twilight lives free from financial and consumer debt, many of us may choose to ignore the reality of what would happen if we were to depart from this world abruptly without making adequate arrangements. Specifically, the outcome could turn out to be an emotionally and financially draining experience for surviving family members who could be confronted with a huge bill for final expenses.

It is also important to emphasise that life insurance is not about catering to the needs of adults enjoying their golden years. After all, it may take years for people to get their finances in order and prepare for their well-deserved retirement .In other words, proper financial planning through life insurance should not only begin when we are already old and have bade farewell to the labour market, it something to think about as we are starting to grow old and still have the financial flexibility to plan for our financial future. To be better off, it pays to be one step ahead.

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