Longevity trends call for retirement planning shift from the quantity of life to quality of life

Op ed by Craig Sher, Head Of R&D at Discovery Invest

Medical advancements are increasing life expectancy worldwide.

Today, many countries have a life expectancy of over 80 years, which is double that of the 1800’s.

Vitality’s gold and diamond status member had an average calculated life expectancy of 89 years in 2023.

Discovery Health Medical Scheme has almost 100 centenarian members now (people aged 100 years or older).

There are many reasons for this increasing life expectancy.

In South Africa, Stats SA data shows that declining birth rates and improved overall quality of life have affected the country’s population structure, leading to an older demographic profile.

More and more people are living longer at retirement.

In 1950 there were only 870 000 South Africans older than 65 years. Today, there are over 5 million.

Some of the researchers from Discovery’s 2022 Retirement Summit expect people over 65 to outnumber children aged under 15 by 2070.

To avoid running out of money later in life, people have to save earlier and save more or work longer.

In addition, the focus is no longer on just having a longer life, but also having a better life while in retirement.

Discovery has been a leader in this regard, creating solutions that not only maximise retirement savings, but also the quality of those retirement years.

Focusing on the quality of life can improve retirement outcomes

The quality of life a person will have during their retirement years is crucial and is determined largely by how healthy they are.

During a person’s working years, a large portion of their immediate consumption is forfeited in the form of long term savings.

It’s a great pity if those hard-earned savings are ultimately used to nurse ill health in retirement instead of being enjoyed in good health.

Physical wellness before retirement is the enabler of happier, better quality years after retirement.

The shift from lifespan to healthspan

In 2021, Vitality International became the first company to launch technology that calculates the number of years individuals can expect to live in good health.

The technology gives individuals personalised recommendations to improve their lifespan and healthspan based on their age, gender, health status, and current lifestyle choices.

Vitality Healthy Futures research shows that 18% of retirees’ average remaining lifetime is spent in sick health.

But by making small changes to their lifestyles before they retire, they are able to prevent major disease burdens in later life and increase their number of healthy years.

In South Africa, Cogence is the first asset manager to incorporate healthspan into retirement planning.

It leverages over 50 million life years’ worth of Vitality data to give scientific, personalised interventions to clients so they can increase their healthy years later in life.

Cogence marries this thinking with the asset management capabilities advised by BlackRock and Aladdin WealthTM, BlackRock’s industry leading investment and risk technology platform to fully model retirement solutions taking health experience into account.

The science of retirement planning is evolving.

No longer is it just about how much money people have to live out their old age, but we now learning that we can influence the number of years clients will spend in good health – their healthspan – to enjoy that money.

Op ed by Craig Sher, Head Of R&D at Discovery Invest