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Rapidly aging populations need financial security, not just caregivers

Society can focus too much on work and ill health

| Japan

Over the past century, the average person has gained an extra 30 years of life and can now expect to live to 72.6. The U.N. estimates that there will be 2.1 billion people aged 60+ by 2050, out of a projected total population of 9.7 billion.

Rapid graying in developed economies from Asia and beyond has implications on all aspects of our society, from health care and financial services to city planning and social services. How we rethink aging -- how we respond, as private and public sectors together -- will have implications for all demographics.

We cannot assume that more and better-trained caregivers and a roboticized workplace will do it: personal financial stability becomes even more important for those living longer, and it is what we must tackle.

According to the recent Work of the Future report from the Massachusetts Institute of Technology, "Demographic shifts will impose steep burdens on national budgets as the ratio of retirees to workers rises and as the growth rate of working-age taxpayers slows."

As workforces contract, nations must invest in robotics and automation and upskill the current workforce to enable experienced workers to stay on the job longer. Such an approach not only captures the benefits of age and diverse experience -- it also provides an opportunity to bring different generations together to create a more inclusive society.

Beyond the workplace, emerging technologies can address the caregiving needs of older adults -- a growing reality that is becoming more challenging with declining birthrates and increasing longevity.

Governments must improve their long-term care systems and community social infrastructure, as Japan has done in recent years -- including the watch-over service by postal workers. This is critical as population declines and the old-age dependency ratio increases.

Watch-over service by postal workers is one of the example of Japan's community social infrastructure.

According to the government's projections, Japan is entering a long period of population decline, going from 127 million in 2015 to 111 million by 2040, and 99 million by 2053. Meanwhile, the average life expectancy in 2018 reached new highs, at 87.3 years for women and 81.3 years for men.

They must also foster a more affordable independent care system, such as the one in Hong Kong, which has the highest life expectancy in the world. Here 40% of domestic workers are taking care of older adults, enabling them to stay in their homes.

But aging societies' needs extend beyond physical caregiving and workforce automation. Achieving and maintaining financial security are equally crucial to sustaining healthy aging.

According to Maybank Singapore, there are 1.4 million Singapore residents aged 50 and above, with an average life expectancy of 83 years. Beyond growing a healthy financial nest egg and protecting their assets from financial exploitation, consumers need help to ensure they can maintain an income in later years when they no longer have a steady stream from work.

Leveraging technologies such as advanced data analytics and artificial intelligence, financial institutions can help consumers better predict future needs, identify potential shortfalls and deliver guidance to gain long-term prosperity. Pefin and Bond.AI, artificial intelligence-based financial advisers, are two of the promising fintech startups developing solutions to address such market opportunities.

As we live in a digital world, data hold the key in helping us get past complexities and ambiguities to make logical choices. Securing financial stability will enable older adults to enjoy the opportunities of extra healthy years of living.

For the expanding middle-aged generation juggling their children and their parents, as well as planning for their own retirement, their needs are acute as longevity increases the complexities of their financial lives.

Where parents traditionally make provisions to care for the young ones, this is an opportunity for financial institutions to help adult children plan and care for both parents and children.

Just as our future workforce will have five generations working side by side, our own living arrangements will likely be very different from what we have had in the past. What we trade off between our own needs and those of our dependents will be a difficult and emotional question that confront us at different stages of our lives. Aging is not the same for everyone. How we age depends on where we live and how we live.

As Prof. Andrew Scott, co-author of The 100-Year Life, once remarked: "We need to celebrate longevity and the growing number of people who are younger for longer."

This demographic shift necessitates that we rethink our approach to money, work and life. Competing demands threaten to divide our fragmented society, where generational conflicts are beginning to strain our economic and social stability.

Governments must step up efforts to provide comprehensive programs to support healthy aging and long-term care, and to create opportunities for older adults to thrive in the digital era.

Companies should end ageism and promote an inclusive workplace where colleagues can benefit from the collective life experiences of those around them.

And -- just as importantly -- it is time for financial institutions to become a true partner, to support their diverse base of customers with their new multistage lives where education, career and retirement no longer follow a linear path, but rather intertwine throughout lives.

Theodora Lau is founder of financial consultancy Unconventional Ventures, a host on Rhetoriq podcast and a contributor to Harvard Business Review, American Banker, Irish Tech News, and Journal of Digital Banking.

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