29 May 2017

Over the past week Australian shares were 0.4% higher. Shares in developed countries rose 0.9% with the US market 1.4% higher. Shares in emerging markets were 2.1% higher. The Australian dollar was down 0.1% at 74.48 US cents. The 10 year bond yield in Australia was 0.06% lower at 2.41% while in the US, the 10 year bond yield closed 0.01% higher at 2.25%. The oil price lost 1.1% to 49.80 US dollars per barrel.

I recently attended a fascinating presentation by Professor Andrew Scott titled ‘The 100-Year Life - Living and Working in the Age of Longevity’, based on the book of the same title co-authored by Scott and Lynda Gratton. The basis of the book is the continuing improvements in life expectancy and what can be done to ensure a good outcome and for it not to be viewed negatively. 

The presentation touched on issues such as finances, education, career and relationships looking through the lens of someone who may easily live to 100. Changes will affect individuals, families, companies and governments. Some interesting points for reflection:  

  • The likelihood of retiring comfortably at 60 or 65 will be more difficult once you consider that your retirement savings may need to fund you for 40 years.
  • 80 will become the new 70 and people may experience an active and potentially more expensive retirement for longer than they anticipate.
  • Governments around the world are stuck between: 
    • a sustainability issue, where they need to raise the age pension access age and push out the retirement age.
    • a social issue, where pushing out the retirement age discriminates against those in laborious work. 
  • A three stage life model - growing and learning, working, then retiring - will likely break down and become a more flexible structure. You may see more career breaks, re-learning, semi-retirements, etc.

For super funds this poses long term challenges. The best super funds will have the products, services and online tools to support members, with technology a big part of the solution.

We’re pleased we have one of the industry’s leading retirement outcome modelling teams, dedicated to leading the design of retirement solutions for our members. We want the potential of living to 100 to be viewed positively by our members. 

Signing off

David Bell

Past performance isn't necessarily an indicator of future performance.

All data sourced from Bloomberg.