Who's afraid of a 100-year life? Here's a roadmap

DOES the prospect of living to 100 sound daunting to you? It does to me. Two London Business School professors - co-authors of the best selling book "The 100-Year Life" - believe it's because most of us have the wrong ideas about ageing.

Whatever we feel about the prospect of a very long life, the demographic trend of longevity is compelling. In the past three to four weeks, Professors Lynda Gratton and Andrew Scott each delivered separate talks in Singapore on longevity. Prof Gratton spoke at a Fidelity International conference on the longevity economy and more recently, Prof Scott in an event hosted by Prudential.

Their talks pack a punch: Today's generation in their 40s and 50s stand a good chance of living to their 90s and beyond. The conventional way of thinking about life in three phases tied to age - education from childhood to early 20s, working life until 60s and then a very long retirement - is breaking down. In fact, it is increasingly untenable.

This is because pensions and retirement funds are not designed to support 30 to 40 years in retirement. In any case technology is already reshaping careers and personal lives in ways that defy the traditional pigeonholes that people are slotted into by age.

Professors Gratton and Scott argue that longevity shouldn't be perceived as a burden. It is instead a gift.

But first we need a sea change in the way in which age is perceived. Older ages should not be equated with poor health, Prof Gratton tells the audience at the Fidelity conference. She is a spry 65. Sixty is the new 40, she declares. "We used to think of old as being 70. Old is 80; 70 is not old. We have to live our lives differently, invest differently".

"Stereotyping by age is worse than gender. The good news is that age is malleable. Only 25 per cent of ageing is genetic. The rest relates to the choices you make about how you live and the environment. As people realise that, they invest more in living healthily. That has profound implications for living to 100."

One of the book's most powerful propositions is its holistic definition of asset management. The latter is not just the management of financial assets. It also refers to personal attributes - such as our expertise, social and family networks, even our reputation - as assets to be managed and cultivated. We are, in this sense, truly asset-rich.

All these assets work together to sustain us into older ages. But we have to do our part to be open to transitions and transformations - again, the concept of age malleability.

More than a decade ago, four authors, academics led by Roger Ibbotson, proposed the concept of lifecyle finance, which incorporates human capital into traditional asset allocation. How this works is almost intuitive. Human capital is highest when we are young, but youth is also a time when financial capital is low. As we get older and progress through our careers, financial capital rises but human capital begins to decline. Hence in retirement, when human capital is lowest, we live on the financial resources we've built up.

Ibbotson's framework fits neatly within the traditional three-phase life. But longevity means we could easily outlive our savings. In the framework proposed by Professors Gratton and Scott, intangible assets are crucial and as important as financial assets in living a long, productive life. More importantly intangible assets should not necessarily decline with age.

Intangible assets

The book posits three categories of intangible assets. First is productive assets which include skills and knowledge, professional social capital such as a peer network, and reputation. A good reputation has to be invested in and acquired over time. Learning isn't just gained via school. As technology and AI permeate our lives and begin to replace rote functions, the authors argue that we need to pick up skills that are valuable - that is, difficult to imitate and to substitute. "There is likely to be a rise in the importance of education that supports the creation of ideas and the value of being innovative and creative," says the book.

The second category of assets is termed "vitality" assets which refer to physical and mental health, and psychological well being. These include rich, "regenerative'' friendships that help to sustain us. The book cites a Harvard longitudinal study of people who enjoy vitality into their old age. Those who are well connected to others are more energetic and positive than those who are isolated.

The third category is referred to as "transformational'' assets, defined as self knowledge, the ability to reach out into diverse networks and openness to new experiences. These qualities build resilience and enable us not just to cope with uncertainties but to come out on top.

So what does a multi-stage life look like? Education, as Prof Gratton says, need not be concentrated in the early years of life, but is "redistributed'' throughout life. "No institution has been fast enough to understand that people want to learn throughout their lives, so that at age 55 they can still get a job, create knowledge, establish a network of peers and build their reputation.'' By the same token, time taken for personal pursuits need not be concentrated in the last years of life.

"I suggest intangible assets are crucial. Work isn't just a means to earn money. Work itself becomes a place where people can learn and build their intangible assets. It's about the very highest quality of human skills." These skills, she says, include emotional intelligence, teaching others and cognitive skills.

But all these skills require "a rested brain capable of thinking deeply and creatively". "That's the challenge of a 100-year life - how to build a life that allows the brain to rest, be creative and to listen.''

In a multi-stage life, time is also redistributed. As more women build careers, for instance, they seek the flexibility to take time off for family.

"People want a multi-stage life but the institutions that frame their lives haven't been able to deliver it. Institutions that deliver it first will have an advantage," she says.

Financial assets

What of financial assets? The book's approach in this aspect is evergreen. To put it simply: Think about the amount of income you will need to fund a good retirement; have a savings and investment plan; stick to it; and watch the costs.

To be sure longevity poses challenges on asset markets and professional investors. We're already seeing this play out. Fidelity International's Rajeev Mittal, managing director for Asia Pacific ex-Japan, said in the firm's conference: "Ageing changes the equilibrium level of demand. It's harder to stimulate demand with the use of monetary policy. Tools like lower interest rates become less effective... What we see is a lowering of asset yields in fixed income, real estate and even equities. With risk-free rate near or below zero it's hard for retirement savers or pension funds to maintain or grow assets... Investors are forced up the risk spectrum. This is a difficult problem we spend time thinking about.''

Julian Webb, Fidelity's global head of workplace investing, spoke on the ageing workforce. There is a "longevity dividend" to be reaped by companies which are able to retain and attract older talent, he said. "The older workforce has a huge amount of knowledge, and they're committed."

So far corporates are laggards, as a white paper by Prof Scott, with input by Prudential among others, points out. Ageism is rampant in Singapore, even with government efforts to encourage re-employment at older ages. Companies, in any case, will have little choice as Singapore's ever-lowering birth rate provides fewer young talent and there are limits on hiring foreign workers.

Says the white paper: "The corporate sector... is appearing slow to change. This has real commercial risks as firms that fail to realise the need to change their working patterns run the risk of losing valuable staff of all ages. They will also run the risk of losing older workers who will be particularly valuable in terms of understanding the needs of consumers who are also ageing.''

For all of us in the workforce, the message is clear: Never stop learning. Have a holistic view of our tangible and intangible assets and nurture them. They stand to yield a dividend, both financial and richly personal, well beyond the years we traditionally define as retirement.