The good news is that we’re living longer, but the bad news is that many are unprepared for the financial burden they face with longevity. This is raising concerns in several areas.
The US age pyramid chart depicts the increasing life expectancy since 1900. At that time, we had a healthy young population, with few adults living into their 80s (dark red). As time progressed, the number of adults living into their 80s and 90s has increased significantly.
Today, a 65-year-old has a 50% change of living beyond age 85, which has changed the way we view retirement.
65 YEAR-OLD MAN
65 YEAR-OLD WOMAN
1 OF A 65 YEAR-OLD COUPLE
87 years90 years94 years
93 years96 years98 years
Previously, workers hoped to retire at age 55, with a hard stop at age 65. But many in these age ranges outlive their retirement incomes. Retirement 2.0 has people working well beyond ages 55-65, with some working into their 80s.
This is creating a bottleneck of older employees that are not ready to retire.
Increased life expectancy is causing ominous consequences:
HR needs to balance the need to retain the knowledge of older workers with the costs associated with an older workforce. You need a holistic view of human resources and risk management, including:
This holistic view of retirement readiness—employees who are financially prepared to retire—requires integrating data across all your benefits programs. By quantifying the financial liability of retaining older workers, you can measure these previously hidden costs, and get the hard evidence to address the growing concern of an aging workforce.