Is retirement dead?

Age­ing was much sim­pler in the old­en days. For cen­turies – if not mil­len­nia – most people’s lives have been accom­plished in three stages: learn­ing, which leads to employ­ment, then retire­ment. 

But in 2022, large­ly thanks to the won­ders of tech­nol­o­gy and improved health­care, the tra­di­tion­al notion of old age is evolv­ing. As a result, life is all the more thrilling. Now, the sup­posed retire­ment age could – and should – be embraced as an addi­tion­al phase of life, one of new­found free­doms, whether hob­bies, busi­ness­es or pas­sions. 

Retire­ment is no longer a peri­od of wind­ing down or depen­dence. On the con­trary, the con­cept will soon expire, con­tends Andrew Scott, a world-lead­ing expert on longevi­ty and pro­fes­sor of eco­nom­ics at Lon­don Busi­ness School. 

There’s no need for pipe and slip­pers in the 21st cen­tu­ry. The lat­est Office for Nation­al Sta­tis­tics (ONS) data shows the num­ber of peo­ple in the UK aged 85 and over was a record 1.7 mil­lion in 2020. That amount is pro­ject­ed to almost dou­ble to 3.1 mil­lion by 2045. 

Addi­tion­al­ly, the ONS cal­cu­lates that life expectan­cy at birth in 2020 was 87.3 years for males and 90.2 years for females. Con­sid­er, at the start of the 1980s these fig­ures were 70.8 and 76.8 years, respec­tive­ly.

Ris­ing life expectan­cy and pop­u­la­tion age go hand in hand. And this trend is glob­al: the world population’s medi­an age in 1970 was 21.5 years, and almost 31 in 2020, accord­ing to the Unit­ed Nations Pop­u­la­tion Divi­sion.

Taking actions for a more rewarding retirement

How­ev­er, to make the most of the pos­si­bil­i­ties of old age, it’s crit­i­cal to take action today for a more reward­ing tomor­row, urges Scott.

“Now there is a greater risk you may out­live your wealth,” he says, refer­ring to squir­relled-away sav­ings and pen­sion pots that have been the typ­i­cal source of funds for retirees. “So you need to invest more in your future self. One of those key invest­ments is finance, but health, rela­tion­ships, and engage­ment – devel­op­ing good health, skills and rela­tion­ships all play impor­tant parts. Any finan­cial plan, though, should be dic­tat­ed around your life plan.”

In 2016, The 100-Year Life – a book authored by Scott and Lyn­da Grat­ton, a pro­fes­sor of man­age­ment prac­tice at Lon­don Busi­ness School – was pub­lished. And while it’s often said “age is just a num­ber”, could it be that we have been using the wrong mea­sure­ment all along?

“It was ran­dom­ly decid­ed that 65 is ‘old’,” con­tin­ues Scott, “and the old­er I get – I’m in my 50s – the more I dis­like that as a start­ing point. While more peo­ple live for longer, that doesn’t con­sid­er changes in how we age, either our health or our behav­iour.”

He believes how we define old age “requires a rethink because tra­di­tion­al age, mea­sured chrono­log­i­cal­ly, is con­fus­ing” and often mis­lead­ing regard­ing life expectan­cy. “We need to focus on bio­log­i­cal age rather than chrono­log­i­cal age,” says Scott. “And we also need to con­sid­er prospec­tive age more – that is, the num­ber of years we have left to live. For instance, the aver­age Brit has nev­er been so old but nev­er had so long left to live – this is how we have to adjust our think­ing.”

Clear­ly, good health and good wealth are mutu­al­ly rein­forc­ing for a life lived as long and as ful­ly as pos­si­ble. But does this require both a shift in mind­set and a change in invest­ment strat­e­gy? For instance, Tony Müdd, divi­sion­al direc­tor for St. James’s Place devel­op­ment and tech­ni­cal con­sul­tan­cy, sug­gests pen­sion schemes are a good idea, but that you can tai­lor con­tri­bu­tions to match your earn­ing poten­tial. In your 50s, you are like­ly to be in a bet­ter finan­cial posi­tion than in your 20s, so why not bump up your input?

Thinking beyond pensions

And while a pen­sion will pro­vide a decent chunk of income for many peo­ple in lat­er life, it’s far from the only source. Müdd stress­es the ben­e­fits of a diver­si­fied port­fo­lio of tax-effi­cient invest­ments, maybe in prop­er­ty or oth­er assets.

He notes, though, that while a lat­er life packed with adven­ture, excite­ment and new oppor­tu­ni­ties is the ulti­mate goal for most of us, the real­i­ty is that dream can be killed by poor health. Müdd wor­ries peo­ple often take a “head-in-the-sand approach” to mon­i­tor­ing their health. He points out that a quar­ter of peo­ple in the UK over the age of 70 will require lengthy health­care.

“It’s a sub­ject that peo­ple don’t like to think about, but long-term care can be very expen­sive, cost­ing hun­dreds of thou­sands of pounds,” he warns. “Lots of peo­ple in the UK are sleep­walk­ing into a posi­tion where they will not get the lev­el of care they think they should receive from the local author­i­ty, so will have to pay for it them­selves. That could drain their children’s inher­i­tance. You can take out insur­ance, but peo­ple tend not to do that. The only way, then, to deal with long-term care is effec­tive­ly to save mon­ey.”

Mov­ing swift­ly away from the gloomy top­ic of impend­ing death is Michael Clin­ton, the long­time pres­i­dent and pub­lish­ing direc­tor of Hearst Mag­a­zines. His book, ROAR: Into the Sec­ond Half of Your Life was recent­ly pub­lished, in Sep­tem­ber 2021. And two years shy of becom­ing a sep­tu­a­ge­nar­i­an, he is accel­er­at­ing, not pump­ing the brakes. 

He coun­ters the think­ing that peo­ple have midlife crises but rather “awak­en­ings”. Clin­ton explains: “At 50, you know a lot about your­self. Now is the time to tap into your awak­ened self and move for­ward. If you are 50 and healthy, you will have a pret­ty good shot of liv­ing to be 90. That will mean sec­ond and third careers, new rela­tion­ships and lifestyles. Sud­den­ly, peo­ple are say­ing: ‘I don’t want to retire; I want to rewire. I want to wind up, not wind down.’”

“Retire­ment is no longer seen as a bina­ry out­come – name­ly, you don’t stop work­ing when you retire now,” Scott says. “Retire­ment used to be like a cold show­er, and now peo­ple want more of a warm bath. Sup­posed retirees often work part time with their exist­ing employ­er or start up some­thing them­selves. Also, with­in two years of retir­ing, one in five peo­ple ‘un-retire’.”

He con­cludes by pre­dict­ing the demise of retire­ment. “If you think about the 100-year life, there must be a move­ment away from a three-stage life – edu­ca­tion, work, retire­ment – to a mul­ti­stage life.” Scott adds: “Before long, we will reach the point where the con­cept of retire­ment itself – if you define it as the per­ma­nent ces­sa­tion of work – will be retired.”