The Longevity Challenge

Talk with any advisor and they’ll tell you they are seeing more clients live into their 90s. Some software companies and financial services giants like Northern Trust are now assuming a client life expectancy of 100 in their financial plans.

Yet over the last year, a number of reports have highlighted the sudden surge in mortality rates among Americans in their 40s and 50s. This increase in deaths flies in the face of what financial advisors are seeing among their clients.

This divergence reflects the sad fact that an enhanced quality of life is now available, if only to a certain group of individuals who tend to be clients of financial advisors. These folks tend to face an array of options conducive to longer, more fulfilling, healthier lives.

In general, your clients are likely to be the lucky ones who have the talents and skills to work longer, and the opportunity to eat better, exercise more and obtain superior health-care services. All that said, many remain fearful that unanticipated health-care costs will ruin their retirement.

But the issues surrounding longevity reach far beyond the current generation of near-retirees. How will the workforce adjust to accommodate individuals who need to keep working and a younger cohort that is looking to advance? Some financial advisors are addressing this problem in their own businesses, others not so much.

American workers today already are finding that employers expect them to possess myriad skill sets. In coming years, this expectation will become a requirement. Even skilled workers over 50 years old already are being challenged.

There is good news out there. As demographers predicted a decade ago at the depth of the Great Recession, developed economies are running low on workers at all skill levels.

Fortunately, baby boomers get along with their millennial children and even enjoy watching the same reality shows. The bad news is they may be doing it for a long time.

Old-fashioned problems like accumulation and decumulation remain vitally important, but tomorrow’s advisors will be forced to become life coaches in ways the first generation of financial planners never envisioned. These are some of the topics we’ll be exploring at our Inside Alternatives & Asset Allocation and Inside Retirement conferences in Las Vegas from September 24 through September 27. We hope to see you there.