A tripartite approach to an aging demographic

Noted Australian demographer Bernard Salt has recently published an article on the 4 life phases of retirement past age 55 - and he is quite correct in noting that the life expectancy of someone aged 55 is nearly an average of 30 years - as much time as many people have been working.  The 4 phases noted are:

• 55-64: Portfolio Lifestyle
• 65-74: Active Retirement
• 77-84: Solo Living
• 85+     Frailty

This different focus on what is otherwise known as the "Third Age" is welcome -and presents both an opportunity and challenge  for individuals, employers and governments alike.  However, to maximise the financial, happiness and societal outcomes  I suggest there needs to be a change of approach from all three parties.

Part of my own portfolio lifestyle (noting that I started this at age 48 and I am still some years away from 55) is that I have trained to be a specialist retirement coach as part of my broader career and executive coaching activities.  I consider retirement coaching to be both the most challenging yet the most rewarding of my coaching - and part of the reason is that I enjoy assisting people to take a proactive approach to an important part of their lives.

However, this phase is not only to do with the superannuation balance but is also about and more to do with finding purpose, meaning and structure in an environment that is not yet well planned by governments, most employers nor the individuals themselves.  So what changes do I see are necessary?  [Please note I have written this from an Australian context although I believe the concepts apply globally.]

Individuals

As people approach the age of 50, I recommend a proactive planning for the next 30 years - the approximate statistical life expectancy according to the Australian Life Tables. However, what I see is that many people are influenced by various age points (55, 60, 65, 67, 70 etc) in the Australian social security, superannuation and taxation systems which induce a "retirement mindset" and a shorter term focus than what may be appropriate.

As  a corollary to this, I also recommend a somewhat discarding of the past 30 years - the approximate working life to date of many Australians.  Whilst this past 30 years of experience can be valuable, is it the right sort of experience for the future of a faster paced ever changing world?  Essentially, it just about requires a "clean sheet of paper" approach to personal career and life planning to ensure that the skills, experience and goals are still relevant to the world around us. [My earlier blog posts on "Personal Branding", "How Important is your Resume" and "Reinventing Your Career and Life" may also be relevant here.]

The consequence of this is that individuals may need to:

• undertake new training/courses
• acquire new skills
• explore new career and life options
• as well as adopt a more  flexible and adaptive thinking - one that is now being seen as important for the development, maintenance and exercise of an aging brain.

This may require the embrace of new and current technologies (iPads, social media, cloud computing etc), flexible working arrangements, more robust performance management systems, different ways of working by the different generations, new codes of conduct to the past - and where the "clean sheet of paper" approach may be useful.

And to conclude, you may wish to look at a subsequent blog post of an inspiring real life example using one of my 70 year old clients of how this can work out.

Employers

Now that Australia has survived the Global Financial Crisis and we appear to heading back to a commodity fuelled sustained pace of economic growth, with skills shortages, lesser immigration due to government policy changes and changing business, consumer and technological conditions, employers will also have to take a different approach to the past.  The skewing of demographics over the next 30 years towards an aging of the workforce will mean that our businesses will need these older employees.

Some aspects that I suggest employers will need to consider are:

• tailored training and retraining of older workers (who in turn will need that more adaptive and flexible approach) to ensure skills are relevant to the needs of the business
• more flexible working conditions and policies to accommodate the needs for the Portfolio Lifestyle and Active Retirement phases
• more coaching and mentoring arrangements - older to younger workers and vice versa - as well as from external sources
• "maternity leave equivalent" type approaches to older workers to retain skills and experience - yet facilitate having time off to travel, study, deal with life events etc
• a general respect and change of attitude with less assumptions about people actually wanting to retire as they head towards 55, 60, 65 etc 

Governments

When we reflect on the past 30 years, most of the legislative changes around retirement have actually been converse to the changing demographics of an aging population - and long term, may lead to major policy challenges.  For instance:

• In 1980, a male could obtain an age pension at the age of 65 and a female at age 60.
• In 1983, the age of 55 was then allowed to be the age at which concessional taxation treatment would be applied to termination payments
• In 2005, transition to retirement pensions from age 55 were introduced
• In 2007, superannuation lump sums or pensions paid from a superannuation account became tax free if paid after age 60
• However, in 2009, the Australian Federal Government announced that the age at which an age pension could be obtained would be extended to 67 from the current 65 - the one change that is taking into account the changing demographics.

Ideally, the federal Government, no matter what political persuasion, should look at all of these interacting dynamics and question whether the policy setting are appropriate for the current and future demographics - as has  commenced with the series of Intergenerational Reports and the recent moving of the pension eligibility age from 65 to 67 from the year 2017 .  As a country, we may not be able to financially afford in the long term having a greater percentage of our population on either social security payments or concessional tax treatments on their income.

A change in these policy and legislative settings may also be beneficial to individuals in that it may encourage them to adopt a longer term proactive approach to the "Third Age Phase" of their lives that is not dictated by when they can access pensions, concessionally taxed superannuation and other government benefits.

I do note however the political challenge of this proposition - particularly when one sees the violent reactions to similar changes in countries like France and Greece in 2010 - and they were only proposing to increase the pension age to 62!   However, long term , governments may not have any choice.

As you can see, there are some different challenges for individuals, employers and governments - and also some incredible opportunities if a consultative, proactive approach is adopted which will result in a viable country for our children, continued economic growth and potentially a much more meaningful third phase of life.

PB

Copyright: Peter Black 2010