At the beginning of the 20th century, life expectancy was under 50 years. Today it’s 78 years. And people are routinely living far past that.
Though the CDC has found that life expectancy has been declining slightly since 2014 — largely driven by drug overdose and suicide — some studies estimate that a large number of children born today may live to 100.
The U.S. isn’t ready for this type of longevity.
According to Ken Stern, chair of the Longevity Project, a new initiative that partners with the Stanford Center on Longevity, the Urban Institute, and other think tanks to research the effects of increased longevity, numerous trends are converging in challenging ways.
“People are going to live and work longer,” Stern told Yahoo Finance. “The age 55 and over working cohort is the fastest-growing cohort of the labor force and will be the largest.”
But there’s another trend that stands to complicate things, Stern says. As companies shift the retirement funding burden onto workers – away from offering defined benefit plans toward defined contribution plans like 401(k)s – retirement has gotten more complex.
The structures that in the past were able to support people’s retirement are crumbling, leaving many workers being forced to cobble together retirement financing from numerous sources. There’s even now a concept of “longevity risk” — running out of money before running out of years.
Should older people work longer or shorter?
The Longevity Project, in partnership with Morning Consult, recently surveyed 2,197 adults to see how they view employment and found that just over a third of people 19 to 29 said the retirement age of 65 should be lowered to “make room for younger people to advance professionally.”
So younger workers do have some concern about older workers’ permanence in the workforce. Since 1983, the employment rates of older workers have risen substantially: the employment rate for men 65 to 69 climbed about 10 percentage points. For women aged 65 to 69, the employment rate more than doubled, rising 15 percentage points, according to the Bureau of Labor Statistics.
According to Stern, this doesn’t make a lot of sense because it’s this older cohort that will be critical to the economy’s growth. But critically, many people will have to work longer to fund retirement. And others might simply want to work longer, if they’re perfectly fit for the job and enjoying what they do.
“The future of work will look very different,” Stern said. But the future of retirement will have to change as well to accommodate. “The people who are responsible for retirement in this country, the policy makers, companies, people in policy and finance, need to come together and create new mechanisms.”
One group that especially needs to address this is employers. According to the survey, 59% of respondents expect employers to play a pivotal role in continuing education and providing opportunities. As careers lengthen, the specters of outsourcing and automation loom large and retraining and continuing education remain pivotal to having an economy that supports the fastest growing demographic.
Other changes must be addressed in the actual mechanisms of retirement. Stern notes that an “extraordinary” amount of people simply don’t have retirement savings.
“There will have to be changes,” he said.
Some of the changes are already afoot. A bright spot of the Project’s survey: Young people are extremely focused on lifelong financial security, even more so than people closer to retirement age. Stern found this especially interesting and pointed to the fact that millennials came of age during the Great Recession as a likely cause.
Amidst all of this stress about how the U.S. will deal with a changing demographic comes the question: is increased longevity a good thing?
To Stern, the answer is an unqualified affirmative – it’s just that the systems in place need to change to support it.
“Longevity is one of the greatest achievements in the 20th century,” he said. “Life expectancy is almost 80 now. People aren't just older, they're living well older. It’s an extraordinary achievement and in millenial of humans, it’s one of the great achievements of mankind.”