Q&A with Andrew J. Scott, PhD, Co-author, “The New Long Life”

Sophia: As we live longer lives, how does that change how we make financial plans?

Andrew: The first thing individuals have to realize is that they have got more time ahead of them than past generations. They need to do things differently and they need to invest in their future more. But because it's a different future that also gives them more options and more choices. And there is the question of what they want to do. And this is where it gets really exciting because we're seeing a change in what people do. So you can now look around and see what others are doing and say I like that, how do I do it? But it is very much about trying to make a friend of your future self. What does your 80 or 90-year-old self want that you can give them now that you're going to thank yourself for later. Start having those conversations with your future self, and start thinking what can I give that person-- is it money, health, skills, good relationships? And then we get to the heart of really what financial planning is-- how do I support the life I want as opposed to how do I have the life that supports the finances I need. And I think that's the really key part of good financial planning.

Sophia: How does the concept you shared in the talk about a multi-stage life change what we expect from financial products and services?

Andrew: In the three-stage life-- education, work, and retirement-- the goal of work was to transfer money to retirement. But now we’re living in a multi-stage life where you have to keep an eye on all your assets—health, skills, finances, productivity. In the 20th century life insurance developed. There was a big risk you might die early, and you wanted to make sure your family was looked after. The really big risk going forward is longevity insurance-- outliving my health, wealth, skills, purpose, and relationships. Also, over a longer life you’re going to have periods that are like the Snakes and Ladders game. What we're going to see in the financial sector is a lot of product innovation because there's lots more new risks around. We're starting to see some of that happen. I think we're seeing more flexibility, about how people manage their pensions after they retire, more options to draw down when you're working and to make up later.

But there are still a whole bunch of risks that we haven't yet got products for. I think what we will see is more AI. The same way we have preventative health, we might do the same thing for finances where we know what triggers a financial problem just as we know what triggers a health problem. And if you can get data that warns people early enough, AI could be incredibly helpful here. Of course, being told that there’s an impending problem that I can do something about requires two things: one is a willingness for me to act on it. And the other is the resources to do something about it. The skills of thinking about yourself in the future are just getting more and more important as we live these longer lives. So how do we get people to think more about their future self and investments?

Sophia: One of the most important investments in your future self will be education. How does the multi-stage life change how we and other companies should approach learning and development?

Andrew: Education will be more spread out across a lifetime. If you’re working into your 70’s and 80’s then you’ll need a 60-year curriculum. We’re going to see a shift in the type of skills we need with much more focus on human skills like coping during a transition or providing a sense of purpose. And we need to drop ageist assumptions like that undergraduate degrees are for people age 18-22. More companies are providing education and training to everyone. They’re now doing it across career stages not just at early stages. So that’s definitely been a positive, and I also notice more firms letting employees decide what they want to learn. Because as career paths become more diverse, it makes less sense for the firm to dictate the coursework and more sense for employees to curate their own learning. And the other thing we’re seeing is firms recognizing that learning is not just something you do in a class, but something you can do all the time. So how do I make sure that when people switch on their machine, there's an opportunity for them to learn continuously, in an easy bite sized form?

Sophia: Thank you for sharing some steps we can take towards a better future. I hope readers will take away some bite sized learnings from this article : )