TIME: Across the generations
Regions: Around the world but especially in developed countries
This has several implications for financial services and, in particular, for financial advisers. It has made established views on retirement redundant. The almost century-long consensus that 60-65 was the most appropriate retirement age is slowly fading, with many countries gradually pushing the state retirement age towards 70. This is mainly because a shrinking workforce cannot support a growing retired population, therefore people are expected to work longer. This coincides with a desire, especially among professional workers, to work longer, albeit part-time.
Retirement has become a gradual process, not a one-off event. That has required creative and imaginative responses from advisers and product providers, and demand for that will grow. It has also raised issues of inter-generational fairness in many developed countries.
As people live longer they delay passing their wealth to the next generation. They will need more of it to sustain their lifestyle and may also need it to provide care at the end of their lives. It is now not uncommon for people to inherit what is left of their parents’ wealth when they are approaching or past retirement themselves.
In some countries, such as the UK, this problem is further exacerbated by the huge proportion of wealth tied up in property, seen by many as their retirement fund.
Governments are unable to solve these problems alone and are looking to the financial services sector to provide solutions to meet the multi-faceted challenge of demographic change.