How Living to 100 Changes Our Education, Work and Retirement

100-year lives may soon become routine. But why, asks the director of the Stanford Center on Longevity, does everyone think of longer lives as something tacked on at the end? BlackRock explains.

Jeffrey Hamilton/Digital Vision/Thinkstock

I recently shared an interesting conversation with Laura Carstensen, who has a unique take on living longer. As the director of the Stanford Center on Longevity, Laura believes that the longevity phenomenon can be felt at every stage of life with a profound effect on work, education and retirement. The highlights of our conversation follows:

A comment that struck me from your TED talk was that emerging longevity should improve the quality of life at all ages. Why is that?

Carstensen: When we talk about longer lives, the discussion tacitly assumes that the only part of life that got longer is old age. But given that we have 30 more years, we can live our lives differently all the way through. People typically say that they don’t have enough time. We do. For the first time in human history, we’ve got more time. So we could make young adulthood longer. We could enter the workforce more gradually and exit more gradually. We could reach the peak of our careers in our 60s and 70s instead of our 40s and 50s.

This seems so obvious that I have to ask why people aren’t doing this.

Carstensen: Humans are exquisitely sensitive to social norms. They tell us when to get an education, when to marry, when to retire, when to have children. It’s no coincidence that most of us go to college at 17 or 18 and not at a random age. The normative structure that is guiding us today evolved for lives that are half as long as they are today. We’re still saying work like a dog from 20 until you’re 65 and then, boom, you finally get some leisure. That has to change. People could come in and out of work throughout their lives and continue working later into their lives.

Aren’t there some very practical questions of how to pay for some of these changes?

Carstensen: Really, the question is what should a 100-year life look like? We need new financial thinking about these cultural changes. We still need to be savers to have high-quality lives, but we could be saving not only for retirement early in life, but also for sabbaticals or for education in your 40s and 50s so people could go back to school.

Is that something that should be thought about on a policy level?

Carstensen: Absolutely. We need major policy support to incentivize change. Employers are not jumping up and down saying, “Isn’t that great? We’re going to have an aging workforce.” Employers are saying older people cost too much and they’re out of date. But then they don’t train workers past their mid-40s because they think they’re on their way out. So you have a tautology where employers assume older workers are out of date and so they don’t give them the training that would keep them up to date.

John Shoven, a colleague of mine here at Stanford, says there should be a paid-up Social Security category where, after you’ve worked for 40 years, you and the employer don’t pay Social Security tax anymore. It incentivizes the worker because net income goes up and the employers save expenses. We could also make all older workers Medicare eligible to take some of the burden of higher medical costs off employers.

What do older workers bring employers?

Carstensen: If I were starting a company today, I would like a lot of young people in my workforce. They are optimistic and open, willing to work hard and are fast learners. But they are also as a group less emotionally stable than older workers. Older workers tend to have more emotional balance, they care about meaning and mentoring younger people. There’s actually a lot of evidence that productivity goes up with age. So I would want a mixture of both.

Older workers can help set new norms about work, about life, about family, that we’re going to all benefit from. Once employers recognize the value of older workers, they will offer more flexible options–and because they can’t offer them to just one group of workers, everyone will take advantage. This could be the best thing to ever happen to parents of young children, giving them more flexibility.

What’s your advice to someone 50 or 60 years old today?

Carstensen: If you haven’t saved, you are going to be working longer. And you should delay taking Social Security until you can get the maximum benefit. But if you hate your job, don’t keep doing that job. Find something different. There’s still time to gain new skills, go in different directions. Find something that’s satisfying. Part of the reason to work longer is financial, but the more we learn about work and engagement, the more we see that it benefits cognitive functioning and physical health.

What sort of help would you like to see from the financial services industry?

Carstensen: Financial advisors are on the front lines in talking to people about their goals. They are a critical starting point for changing the conversation, pointing out new interesting things that people might try to do or want to do. Get away from this idea that you’ve got to save, save, save and you can never get enough for retirement and instead begin to have people save in ways that will afford them more flexibility throughout their lives. That’ll be more inspiring to people.

We are talking about a lot of change to education, work, savings patterns and retirement.

Carstensen: Change happens in a lot of different ways. Sometimes, it does happen very slowly. Then there are other times where change happens seemingly overnight. Think about recycling. If you told me twenty years ago we were going to have people separate their trash into different containers, I would have just laughed. Now, it’s the norm. So things are going to change. What makes it urgent that we need for these changes to happen right now, not gradually over decades. We have this very large cohort of people who are going to move through middle age into old age and they’re going to set new norms. If they can set new, open, positive norms about work, about life, about family, we’re going to all benefit.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of August 2015 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.

This is intended for general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.

©2015 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc., or its subsidiaries. All other marks are the property of their respective owners.