The long-life paradox

Today’s 5-year-olds have it even better than you think.

In the wealthiest nations, more than half of these tykes will live to at least 100, the Stanford Center on Longevity expects.

But a society full of centenarians poses a profound challenge for the world’s advanced economies and many of its companies: How do you adapt to an older world and pay for the inevitable pension time bomb ticking in the background as this super-ager cohort approaches retirement age?

As the Stanford center puts it: “The 100-year life is here. We’re not ready.”

The real-world effect of the worries about the long-life paradox were on full display this week: In France, nationwide strikes and protests brought the country to a standstill at the government’s deeply unpopular attempt to reform pension rules; in China, authorities reported that the population was falling for the first time in six decades; and at the World Economic Forum in Davos, Switzerland, business leaders and policymakers grappled with the consequences of this demographic conundrum.

The ticking time bomb

In France (life expectancy: 82), workers and students took to the streets to protest President Emmanuel Macron’s push to overhaul the pension system and raise the minimum retirement age to 64 from 62 by 2030, an attempt to tame the country’s ballooning social welfare costs. (In the United States, where the life expectancy is 77, the typical retirement age is 67, but workers as young as 62 can begin collecting Social Security benefits.)

France spends just over 14 percent of its GDP on pensions, one of the highest rates among the group of rich countries that comprise the Organization for Economic Cooperation and Development. “We need to work more,” Mr. Macron said in a New Year’s address, to “pass on to our children a fair and durable social model, because it will be credible and financed in the long term.”

The situation is more grim in China (life expectancy: 78), which is confronting a shrinking population. One reason: It costs more to raise a child in parts of China than it does in the United States, a reality that’s pushing families and professional women to choose not to have children (despite a number of government inducements to get them to do so). The not-too-distant impact: a shortage of workers could imperil economic growth and torpedo Beijing’s ability to raise sufficient funding through taxation of the younger, working population to support the biggest population of pensioners on the planet.

S&P Global, the credit ratings agency, sees China- and France-like warning signs across the world. Lower fertility rates, rocky public finances and rising interest rates combined with longer life expectancies are creating a “global aging crisis.” Unless countries begin serious “policy action to cut age-related spending,” two Standard & Poor’s analysts, Samuel Tilleray and Marko Mrsnik, wrote in a note this week, a potential avalanche of longevity-fueled junk ratings will follow, raising costs for future generations. “Just over half of the 81 sovereigns we have analyzed would have credit metrics that we associate with speculative-grade sovereign credit ratings (‘BB+’ or below) by 2060.”

Welcome to the ‘longevity economy’

At the World Economic Forum, organizers tried their best to change the gloomy Malthusian narrative about aging. Talk of time bombs or a “silver tsunami” were out, replaced by high-level discussions on what the forum calls the “longevity economy.” A central theme: If we’re expected to live longer, we’re going to have to adjust some life goals and work longer, too.

Darryl White, the chief executive of the Canadian bank BMO, said society needed to consider a different kind of life hack. For starters, we have to ditch the first-school-then-work-then-retire framework. Life is “nonlinear,” he told a panel on super-aging. “I could decide that I want to start working earlier. I could decide that I want to retire later. I could decide that I want to have various recommitments to my career as I reinvent myself.”

Upskilling and reskilling are important to this strategy, an investment obligation that will need to be shared by employees, employers and governments. The upside: W.E.F. calculates that by improving access to reskilling and lifelong learning, workplace productivity would increase and add $8.3 trillion to global gross domestic product by 2030.

Giving workers the opportunity and resources to work well beyond their retirement age is good for society and companies, said Lynda Gratton, a professor of management practice at London Business School and a co-author of “The Hundred-Year Life: Living and Working in an Age of Longevity.”

“We know that when people stopped working in their early 60s, their social capital deteriorates, their networks deteriorate. They’re not so cognitively active,” she told DealBook. Plus, a longer stint in the workplace would help their personal finances, which would ease pressure on the pension system.

Age discrimination, she said, is growing more pervasive in the corporate world, and that could affect corporate productivity. “I would like to see corporations held accountable for age discrimination just as they are for every other form of discrimination,” she said. “I would like companies to have to report how many people are employed at different ages so we can get a sense of, ‘Are you employing people in their 60s and 70s?’” Such a measure, she believes, would pressure management to recruit from a broader talent pool. And companies would see the benefits of building multigenerational workplaces.

‘A huge burden on the young generation’

Young people struggling to break into their careers might want to see such data reported, too. Noura Berrouba, president of the National Council of Swedish Youth Organisations, told the W.E.F. panel that age-based discrimination affects the job prospects of the old and young alike. “If we’re being honest, the way our demographic curve is bending, it’s going to be a huge burden on the young generation,” she said.

She proposed more progressive tax policy, fairer wages and more corporate governance scrutiny to ensure that enough money is going into the collective pot to fund more people getting a social security check.

Ms. Berrouba also suggests that workplaces need to strengthen the bonds between younger and older employees. “If people are living longer lives — hopefully more equitable lives — we need to make sure that intergenerational solidarity is part of that,” she said. “Many young people feel that intergenerational solidarity is going in one direction. It’s going from young people to the elderly, but it’s not going in the other direction.”

Governments have made steady changes to national retirement policy in recent years. The O.E.C.D. average for the minimum retirement age is 62.5, but will tick up to 64 in the coming years as a number of countries, including Denmark, the Netherlands and Sweden, push up the minimum pension age to correspond with increases in life expectancy.

Hervé Boulhol, a senior economist at the O.E.C.D. specializing in pensions, bristles at the idea of an aging time bomb threatening the world’s biggest economies. But he does see a risk if policymakers and business leaders fail to address the matter. “Yes, the clock is ticking,” he said.

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