The new meaning of retirement

This NICSA News guest blog feature was written by Joseph Coughlin, PhD, is the director of the MIT AgeLab ( and keynote speaker at the 2013 NICSA General Membership Meeting in Boston.

Money TreeRetirement is being retired. The financial services industry that once premised its advice and products on retirement being a time to relax and enjoy time with friends and family is facing a disruptive change – not from new technology but from the demands of a new older consumer.

This is not your father’s (or mother’s) retirement. The next and future generation of retirees is characterized by ‘more’. Not necessarily more money, but more years in old age, access to more information and more demands to meet the expectations of living longer better.

The fastest growing age cohort are people over 85. A 60-year-old today is likely to live at least three to six years longer than a 60-year-old retiree only 30 years ago, meaning most will now be looking at life well into their 80s.

The baby boomers, Generation X and the ‘new kids’ Gen Y have more education than any previous group of Americans in history. The increase in college education has given rise to a generation of researchers. Years of school combined with the capacity of the Internet to make everyone an “expert” is contributing to an attitude that with enough information and time they can figure ‘it’ out. It can be their next major purchase, their health conditions and yes, their future financial plans. More education and access to more information (not necessarily insights) is raising expectations for what professional advice can and should deliver.

Sixty years of economic growth and technological innovation have persuaded many to expect their life to be not only longer, but also better. Improvements in healthcare technology, communications, food and even transport over a lifetime have persuaded the nextgen retiree that quality living in old age is not only possible but to be expected. Quality of life in old age – ‘there better be an app for that’. Tomorrow’s older adults will demand access to innovations that support quality aging and the financial capacity to buy what they want as much as what they need.

The future of retirement planning will be more than the promise of financial security – it will require new thinking about navigating longevity. Advisors, product producers and a new range of strategic services partners will evolve to create the new business of longevity management replacing today’s industry of retirement advice and planning. The new business of longevity management will be characterized by rethinking planning advice, product innovation and partnerships.

Value-Added Planning

The advisor relationship in planning used to be having the right understanding the client’s financial security needs, selecting the right products and making the right adjustments along the way. Today getting it right is not good enough. Advisory practice management will need to demonstrate fluency in addressing longevity. Clients are coming to demand comprehensive planning that charts what they will need in old age. Money is the new utility. Like electricity nothing works without it, but true value added advice, the kind clients will pay for, must include longevity education. This will include understanding the impact and costs of health in older age. How living arrangements will impact long-term quality of life. Addressing the implications as well as expense of aging-in-place or downsizing. Ensuring that informal care provided by family or friends can be financed.

Purposeful Products

Products that promise the ambiguities of income and security alone are failing to engage a generation of clients who have always enjoyed more, better and now. Saving and investing today in a future self that is retired is similar to asking someone to delay their happiness in purchasing a flat screen television to give money to a stranger. Successful products will become purposeful. That is, a given product, e.g., annuity, funds, will be linked to something people can see today and envision using tomorrow. Specific demands linked to specific products and investments will not only engage clients but will provide a tangible foundation to real longevity planning. One product will be dedicated to home maintenance and modification to ensure that you can stay in your home for as long as possible. Another income product may be dedicated to purchase the healthcare technologies that may not be covered by public or private insurance. Other products may be manufactured to provide income to family who provide care. Moreover, these products will not simply provide cash – they may be formally linked to ‘trusted’ service providers.

Provider Partnerships

Financial planning that only provides adequate funds and education is not innovative. Real innovation is about anticipating and meeting the customer’s needs (most people do not know the new future of old age) in their seventh, eighth decades and beyond  – completely. Value-added advice will identify what old age is likely to bring and connect me to a network of trusted providers in my area for everything from home maintenance to homecare. Likewise, products will do more than provide financial security specialized products and their manufactures will link clients to trusted service brands. Strategic partnerships where investments are made to ensure that national vetted service providers are in place as a client ages will become the new norm. Imagine a product that provides income to ensure regular home maintenance by a national service company or retailer to do everything from housecleaning, appliance repair to regular home inspections.

Retirement just got complicated. The generations preparing and investing in life after full-time work expect to live longer and better. Engaging them will require more than a plan of financial security in older age, but a complete picture with tangible products and relationships that will make up their life tomorrow.

To hear more from Dr. Joseph Coughlin, register for the 2013 NICSA General Membership Meeting in Boston on September 19th and 20th.

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