Financial Planning

The 100-Year Life: Part 2 – Work

This article was originally published on Quadrant Group’s website. Quadrant Group was acquired by Progeny in March 2017.

Six professionals of different ages sitting on chairs in a white room

Inspired by the book ‘The 100-Year Life – Living and Working in an Age of Longevity’, I’m exploring the financial implications of an increased life expectancy in the West which sees those born today entering the world with an above average chance of becoming centenarians. The book suggests that the days of the three-stage life (education-work-retirement) are numbered and argues that the old order must be replaced by a new multi-stage life where transitions, career changes and continuous education are the norm. Another pragmatic reality of this new multi-stage life is that many people are simply going to need to work for longer, otherwise a lengthening lifespan combined with a fixed retirement age, spells a future pension funding shortfall.

Over three articles, I’m considering how this shake-up of the traditional education-work-retirement template will change each of these individual stages and what this might mean for us as individuals, wherever we are in our own life stages. Last month we looked at retirement. This month’s topic is work. How will our working lives need to alter to adapt to a 100-year lifespan?

Brave new world of work

The history of work has always been a story of change. Employment sectors rise and fall in prominence as the tides of socio-economic supply and demand wash in and out with the generations. For example, in the US in 1910, one in three men were employed in agriculture, versus 1 per cent of the population today. The twentieth century saw us move out of the fields and into the offices of our urban centres. As we move through the 21st century, rapid advancements in technology, robotics and Artificial Intelligence will mould a new employment landscape.

The authors of ‘The 100-Year Life..’, Professors Linda Gratton and Andrew Scott of the London Business School, believe that we’re entering an age of greater entrepreneurialism and self-employment, where big organisations will still continue to exist but will be surrounded by smaller, more nimble and specialist people and companies. Platforms, where skills can be matched with demand and providers are validated by their customer communities, will continue to proliferate. This mode of operation has been embraced by the relatively new but burgeoning ‘gig economy’, where providers work on a series of short-term contracts or freelance on single jobs as opposed to working permanently. These new ecosystems are likely to blend life, work and leisure differently from the three-stage life. The authors make an interesting observation that until the Industrial Revolution established the norm of daily work needing to take place away from the home, it used to be common for many people to work from home where it would be more naturally intertwined with life and leisure.

The consequence of giant leaps in technological progress is the basic fear that machines will take our jobs, which is an anxiety that has also been around since the Industrial Revolution. Some commentators have predicted a hollowing out of the job market, with medium-skilled jobs being replaced by robots and technology leaving only the low-skilled and high-skilled roles at either end of the spectrum. Gratton and Scott are more positive in their prognosis. While the fear that technology will make some jobs obsolete may turn out to be correct, history shows that innovation and machination has the capacity to create new jobs in as-yet unimagined markets.

If we are to truly grasp the opportunities of the 100-year life we will need to prepare for a much longer working stage, but one which includes far greater variation and is spread across multiple stages. The traditional model with its second stage of steady progression in a relatively unchanging sector is unlikely to be sufficient to sustain a rewarding or prosperous career. And if we consider the prospect of working into our eighties, fresh challenges will be vital to keep us engaged, energized and not in danger of dying of boredom! The authors sketch out some examples of what these potential stages might look like, all of which they view as age-agnostic so they can be experienced at any stage in our working lives.

The Explorer stage is for discovering about the world and oneself, as well as “..excitement, curiosity, adventure… Not settling down, staying agile and light, and keeping financial commitments to a minimum so as to move easily.”

The Independent Producer stage is a period of dynamism and action in building partnerships and businesses. It occurs “..when a person forsakes a conventional career path to start up their own entrepreneurial activities.”

The Portfolio stage embraces the freedom to take on a number of different, smaller roles rather than focusing all efforts solely on one area or discipline, which, “for some… will be an option that is actively pursued to explore and experiment; for others… will be a situation that is thrust upon them because securing a meaningful job has been so hard to achieve.”

What does it mean for the individual?

In the previous article we looked at what the retirement prospects in the new multi-stage life looked like, giving an indication of what it would mean for the 20-year-old, the 45-year-old and the 70-year-old. The changes to the employment landscape are unlikely to impact on today’s 70-year-old, unless they want to continue working beyond traditional retirement age, but there are certainly implications and opportunities for today’s 20-year-olds and 45-year-olds.

The 45-year-old: Many in people in their 40s and 50s are in danger of approaching retirement without adequate financial preparation. They might be following the three-stage life plan and hoping it works out but given the changes to company and State pensions, the burden of saving for the future has fallen on them and many haven’t fully realised this. With two more decades of technological innovation to ride out on an education they ended two decades previously, they are playing a risky game.

So what are the options open to them? Gratton and Scott believe that taking a less passive role is vital. Being aware of the need for change and the length of the working life still left demands being spurred into action. Conducting a truthful reckoning of where you are, where you want to be (or don’t want to be) and making changes, investing in education or training, perhaps taking more risks means accepting there will be the need for transformation. This could mean retraining to build a more diverse portfolio career, or taking the leap, becoming an entrepreneur and starting their own business. Rather than sleepwalking towards a retirement which might not deliver what they were expecting, they need to act.

The 20-year-old: Today’s school and college leavers, those just entering the employment market, will be far better mentally prepared for this new multi-stage life template. There are also far more options and potential paths open to the 20-year-old than there were to the 45-year-old, even if the prospect of a 60-year career could be a daunting prospect from their standpoint. But this should be what inspires the realisation that the balance between work, life and continued education should be something they devote significant time to planning for and achieving. It’s likely that their lives will include a significant number of transitions as they pick and choose between a range of the multiple stages on offer to them. Seeking meaningful jobs they find rewarding and fulfilling and building breaks into their careers will be crucial to keep them energised and engaged in this extended stage of working life.

At Quadrant, we’re meticulous in making sure our clients have the right financial plans in place to deliver the lifestyle they want. If you would like some help in structuring investments to meet your financial demands of today as well as tomorrow, please get in touch.

In the next article, the final of our three-part series inspired by ‘The 100-Year Life: Living and Working in an Age of Longevity’, I’ll be exploring how rethinking the three-stage life impacts on the way we will educate ourselves and continue to develop our skills throughout life.

Update: Part Three is now online – read it here.

This article does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections.

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Author Andrew Pereira

Director, Progeny Wealth

Andrew has been working with families, high-net-worth clients and business owners for well over 20 years.

Learn more about Andrew Pereira

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