Warwick Wealth Matters – June 2023June 23, 2023
Bequeathing Rights To PropertyJune 26, 2023
An Article by Ian Kilbride
The first person to live to 150 has already been born. This startling fact is even more remarkable given that as recently in human history as the 19th century, life expectancy averaged between 28,5 to 32. In 1900, this had risen marginally to 31-32, and in 1950, the average lifespan globally was 45,7 to 48. The corollary of this was that until the mid-20th century, the infant mortality rate globally was around 40-60%. Today still, 2,3 million children die in the first month of life. However, world average life expectancy has risen to around 73.
Japan has the oldest population in the world, with 28% of its population having reached 65. The top ten oldest population countries are mostly to be found in Europe, including Italy, Portugal and Finland. By contrast, Niger has the world’s youngest population, with almost one in two of the population under 15. Closer to home, 47% of Angola’s population is under 15; in the DRC this figure is 46% and in Zambia 44,5%. Unsurprisingly given its epic recent development, the country with the greatest improvement in longevity since 1960 is China. Average life expectancy in the Middle Kingdom is now 33 years longer than just 50 years ago. The longevity trend is also evident in other developing countries such as India and Brazil. So, by 2050 actuaries and human geographers expect two billion, or 22% of the world’s population to be over 60.
Public health care is the biggest contributor to longevity, but improvements in safe working conditions and remarkable advances in the pharmaceutical sector and technology play a role. Indeed, the World Health Organisation has now declassified aging as disease, regarding it more now as a treatable condition. In this regard and stretching scientific credulity, University of Exeter researchers in the UK have already developed a technique that reverses aging in cells, as well as discovering an anti-aging genetic mutation.
But while these trends bear testament to rapid improvements in human development there are consequences. This ‘silver tsunami’ means that future over 60s will need to work longer and delay their pensionable age merely to ‘survive’ a longer period of old age. This has seen a number of developed countries signaling their intention to raise the state pensionable age by one or two years. In France, the state’s intention to raise the pensionable age from 62 to 64 by 2030 has been hit by violent street protests and may prove to be the political downfall of young President Macron.
By contrast a recent McKinsey report contends that over 60s are neither past their prime, nor surplus to requirements for the economy. Their research found that many over 60s wish to remain economically active, and along with deploying their lifetime of skills accumulated, wish to spend their wealth in sectors that are tailored to their specific needs, particularly those of leisure and travel. McKinsey contends that meeting the economic, social and financial needs of the ‘young old’ can add US$12 trillion to the US economy by 2040.
The blooming of retirement and lifestyle property developments that provide security and social activity, together with healthcare and frail care facilities is the most visible manifestation of the aging industry. Indeed, we are only scratching the surface of ‘smart housing’ that is wired with integrated touch screens and voice activated technologies for retirees. Such technology allows for better ‘connectivity’ to available healthcare and entertainment, but the use of robotics provides for greater mobility and day-to-day functionality for those less mobile. In this regard, there is an urgent need for training programmes for retirees to make full use of the power of modern technology, not merely for purposes of communication and entertainment, but rather as fundamental to a healthy, safe and active retirement.
In a world that is youth and social media obsessed, demographics and pure economics mean that far greater attention and investment should be made into the technology needs of the aging population.
But as a first step, we have to seriously rethink the basics of investment and savings. The general notion of retirement at 60 or 65 and living off a state or private pension is implausible and unachievable for many millions. South Africa is certainly no exception, give the absence of a social welfare net and the inadequacy of the state pension system. Moreover, the current sticky wave of global and local inflation has sent worrying shock waves through the retirement and pension funds of those who had grown accustomed to living in a low or no inflation environment.
So, while medical, social and technical advances are set to produce entire future generations of centenarians, today’s sobering truth confronting us is the need for a fundamental rethink of how we sustain our private wealth and the vital role of asset managers play in achieving this.