Longevity economy and financial well-being

As the life expectancy of the world’s population lengthens and the birth rate declines, new approaches are needed to address social and economic challenges. A study by the World Economic Forum details the principles to be followed to ensure social well-being and prosperity amid this demographic paradigm shift.

 

The success of socio-economic development is often accompanied by an ageing population. In addition to improvements in nutrition, medicine, sanitation, education and economic well-being that extend the life expectancy of the population, there is a reduction in the birth rate, either because of the exodus of rural populations to large cities or because people have other priorities.

The fact is that the world is ageing fast. People over 60 years of age already represent 11% of the world’s population and, by 2050, this figure will rise to 22%. In Spain, it is expected that by this date there will be 23.3 million people over 50, half of the population.

This will have a major economic and social impact. As life expectancy lengthens, the proportion of the larger population that is economically dependent increases, while at the same time, fewer people can contribute to paying the pensions of an ageing population.

In other words, it becomes difficult to guarantee the welfare of this ageing population. According to data from the World Health Organisation, while life expectancy has increased by more than 6 years from 2000 to 2019, healthy life expectancy has increased by just over 5 years.

It is therefore necessary to implement new measures to ensure that the longevity economy is not at odds with the well-being of the entire population and has a positive impact amidst the changing global demographic landscape.

 

The 6 principles of the longevity economy

The report presented by the World Economic Forum acknowledges that it is not easy to address longevity issues globally, as each country has a different reality: various pension and retirement systems, divergent retirement ages and different choices by gender or profession. However, it proposes a set of six principles to which companies, governments and societies can subscribe.

  1. Ensuring financial stability across key life events. Nearly 40 per cent of the world’s population faces financial instability due to unplanned career interruptions, unexpected illness or retirement and would find it impossible or very difficult to access emergency cash within 30 days. Two-thirds of the population are worried about not having enough money for normal monthly expenses and half would run out of savings within a month if they lost their income, while a third would do so within a week.

    Therefore, public-private partnerships should be encouraged to design policies and programmes that protect people from falling into poverty as a result of key life events and provide workers with access to financial savings and insurance vehicles, so that there is a financial cushion and no danger of outliving savings.

  2. Provide universal access to financial education. Only 33% of the world’s population is financially literate, contributing to economic inequalities that are strongly correlated with inequalities in life expectancy. In other words, a large proportion of citizens lack the necessary skills to manage their finances effectively.

    Financial literacy is a necessary skill that is essential in everyday life. It is easier to make the right decisions about managing a household, planning savings, applying for credit or taking out a mortgage if we have a minimum level of financial literacy. Consequently, there is a need for comprehensive and unbiased financial education to enable people to make informed financial decisions.

  3. Prioritise healthy ageing as the basis for the longevity economy. The main reason why older people leave their jobs before reaching retirement age is declining health. Eighty per cent of adults in developing countries are worried about the cost of medical expenses and suffer from illness for a fifth of their lives.

    The focus needs to be on equitable access to health services that can facilitate the well-being of both the individual and society at large through prevention and care. By seeking to delay or prevent the onset of diseases, especially chronic diseases and accidents, because of their financial impact on the individual and society.

  4. Evolve jobs and lifelong skill-building for a multigenerational workforce. Globally, up to 25% of people aged 55 and over want to work, but cannot because they have difficulty finding opportunities. Ageism or technological barriers are some of the impediments they encounter that cause them to be pushed out of the system no matter how much they want to continue working.

    Demographic changes and technological innovations require occupations and training to adapt and evolve, allowing people to extend their working years as they wish. Continuous training and lifelong learning should be commonplace for individuals and enterprises and supported or promoted by government and organisations.

  5. Design systems and environments for social connectedness and purpose. The study stresses the importance of social connectedness. Socially isolated, older people are at greater risk of illness and premature death. Numerous studies have scientifically proven the correlation between loneliness and illness.

    Encouraging the design and promotion of systems and environments for social connectedness can mitigate these effects. At the same time, ageism must be combated to avoid this double discrimination that isolates people over 50 from society and can lead to poverty.

  6. Address longevity inequalities, including across gender, race and class. Pensions are not distributed equally, with women receiving, on average, 26% less in retirement pensions than men. Within the same country, there are situations of inequality in life expectancy depending on the income level of citizens, or their ethnicity.

    Advocacy for equal pay and pensions, as well as support for informal carers, are some crucial elements to ensure that financial security and the benefits of longevity can be more accessible to all.

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  1. Manuel Bullich BuenoManuel Bullich Bueno says:
    Manel

    Molt bon article.
    Merci

    • Xavier Vinolas EscodaXavier Vinolas Escoda says:
      Xavier

      Gràcies, Manel! Celebrem que t’hagi agradat

      3 weeks ago

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