Exclusive Interview with Joseph Coughlin: Why the Retirement Fiduciary Cannot Ignore Age Longevity
When we asked Nevin Adams which of the featured speakers at the upcoming NAPA 401k Summit (Nashville, Tennessee from April 17th-19th 2016), he immediately suggested Joe Coughlin, who will be keynoting the closing general session with a talk entitled “Disruptive Demographics – How the Client & Technology Will Transform the Future of Retirement Advice.” With a provocative title like that, how could anyone turn away from the offer? Age longevity represents a trend of significance in all aspects of our lives, our economy, and our future.
Joseph F. Coughlin, Ph.D., is founder and Director of the Massachusetts Institute of Technology AgeLab. He teaches in MIT’s Department of Urban Studies & Planning and the Sloan School’s Advanced Management Program. His research focuses on how demographic change, technology, social trends and consumer behavior drive innovations in business and government. He has authored more than 100 research publications and a book on aging and transportation. Dr. Coughlin is a regular contributor to the Wall Street Journal, MarketWatch, Slate.com and his own blog Disruptive Demographics on BigThink.com. He was named by The Wall Street Journal as one of “12 pioneers inventing the future of retirement…,” and by Fast Company Magazine as one of the “100 Most Creative People in Business.” Dr. Coughlin was appointed by President George W. Bush to the White House Conference on Aging Advisory Committee and has advised non-profits, governments and corporations worldwide. He is writing a forthcoming book with Public Affairs Press examining the convergence old age, business & technology.. He has been featured on ABC, BBC, CBS, CNN, NBC, The Today Show, Economist, Financial Times, The Straights Times, New York Times, Wall Street Journal, and other media outlets throughout the world. Prior to MIT he was with EG&G a Fortune 1000 science & technology firm consulting to business and government worldwide.
FN: In a way, you’ve come into the topic of retirement planning and advice through the back door. What are some of the more significant personal highlights in the path that has led you to where you are today on this subject?
Coughlin: My introduction to aging and retirement was through my work as a policy consultant supporting the US Department of Transportation and the White House Office of Science & Technology Policy on the issue older drivers and highway safety. While the issue of “older drivers” is often trapped between humor and horror, it demonstrated the nation’s complete lack of preparedness to for an aging society. We fundamentally lack the ‘infrastructure’ to support a nation where nearly 1 in 5 to 1 in 4 Americans will be over retirement age. This observation made me curious to look at other areas – housing, well-being, family provision of care to loved ones, communications, future of work. What I found is that while we may have general foundations to plan for financial security in older age, we have a dearth of ideas of what we will do for nearly 1/3 of our adult life. Therefore, my research agenda has set out to understand, and to develop, new approaches to living for 100 years. While financial well-being is certainly fundamental, planning and navigating the new future of old age requires both a practical vision for what we will do with a nearly three decades of a longevity bonus that no previous generation has enjoyed.
FN: Lay some statistics on us. How has life expectancy changed over the last century? Why is this so?
Coughlin: There have always been older adults. Many living well into their 90s and beyond. However, think of this – life expectancy in 1900 was only about 47 years old. A whole new meaning to what we might call midlife crisis today. The largest, and, perhaps the loudest generation, the baby boomers, are now turning 70 years old – one nearly every seven to eight seconds. Longer life has translated into a longevity revolution. Today, nearly half of the children born in the United States, EU and many parts of Asia can now anticipate living to 100. These are what I have dubbed ‘disruptive’ demographics requiring new thinking about just about everything.
FN: The new retirement is far different than our old concepts of retiring. What is the difference between baby boomer retirement lifestyles and their parents’ retirement lifestyles? How will the retirement lifestyles of baby boomer’s children differ from their own?
Coughlin: Each successive generation is experiencing a different context of retirement. Our parents and grandparents had the advantages of defined benefits plans – as long as you participated in your employer’s retirement plan your financial security was generally predictable. Today, far, far fewer people can anticipate that stability without their own aggressive retirement planning behaviors and strategy. Moreover, previous generations could not anticipate living as long as the baby boomers and future generations – therefore retirement is a much longer period than ever before. Suddenly, living, or at least living longer, has become a risk to a good retirement. Well beyond finance, a key difference between the generations is attitude. There is the expectation to live longer and better. The baby boomers, Gex X and the Millennials have seen improvements in nearly everything they have experienced and touched. This expectation will drive the search for income to acquire the products, services, and even experiences, we will want in the new old age.
FN: As people remain mentally and physically robust through the traditional retirement age, they are discovering they are outliving their careers. How will this change the hiring practices of companies?
Coughlin: The future of work is about to be rewritten. There used to be younger and older workers – essentially two generations. Today, there are three, four perhaps even five generations of workers in today’s workplace. Hiring practices must change to adapt to the new realities of this multigenerational workplace. First, while there are many younger workers, there are not necessarily younger workers for all professions that need to replace retiring talent. Petrochemical, medical, defense, agriculture, transportation, among other fields, are all facing a shortage of new workers to replace the retiring baby boomers. Moreover, those older workers are taking with them the ‘know how’ of their companies, agencies and small businesses. The result of the coming wave of retirement is a crisis of lost knowledge in many sectors.
Second, is the new reality that we will have more than just several jobs over a lifetime – instead – we are likely to have several careers. The Millennials, and Gen Z behind them, are likely to have three or more careers over their work life. Employers will have to adapt to this by rethinking employee hiring at any age, education over the life course, and highly flexible and mobile benefits.
FN: How will longevity change the demand for education (perhaps leading to an “advanced age” degree) so retirees can follow intellectually pursuits or even learn skills for a second career?
Coughlin: If we begin thinking about 100 years of life as the new normal – imagine how education must change. The pace of new knowledge, technological change will require rethinking of education. Degrees will be starting points rather than completion points. Learning online, and on-the-job, will be required to stay competitive in the job you have today, and an absolute necessity to pursue a different career tomorrow. Moreover, education will be crucial to remaining engaged in a full life for those decades of life after work.
FN: As we enter a new age of retirement, we’ll begin to see different demands on technology. What are some of the changes you foresee? Which of these are merely extensions of current technology and which are related to a coming need but are yet to be invented?
Coughlin: Living longer is only part of the new old age – the desire and the market opportunity is how to enable living longer better. Technology will be a major factor enabling us to work longer, to age in the homes of our choosing, remain mobile, or to access the services we may see as convenient today but necessary for care tomorrow. Imagine the workplace being redesigned to be exciting for new employees while ergonomically improved to enable older workers to continue working safely and comfortably. New smart appliances throughout our homes such as intelligent medication cabinets that remind us to take our medication, refrigerators that order our food or robots that keep us company and ensure that we are safe and well at home will become our homes of the future. Sharing economy services, such as transportation provider Uber, or home services manager, Hello Alfred, will make life by app possible – not just for young Millennials, but critical to the convenience and care of older adults in retirement. Your smart phone might be the very platform necessary to provide an entire virtual assisted living right in your own home.
FN: You written about the “Birth Dearth”? Can you given the numbers on the declining birth rate and the implications it has to longevity.
Coughlin: Global aging is the most dramatic demographic change facing the world today. Population aging is the result, in part, of incredible successes in reducing childhood deaths and improved care in older age. However, the population’s average age is rising because the number of children is plummeting. A fertility rate of 2.1 children per female is necessary to maintain a population. Today, fertility rates are dropping throughout Europe, parts of Asia and North America well below replacement rate, e.g., 1.4 in Germany and Japan. As a result, populations are not just aging, in nearly all industrialized countries, they are shrinking. While fertility rates are also dropping in the US, it is the youngest of industrialized economies and this demographic reality may be a key component of its economic strategic advantage for decades to come.
FN: Along similar lines, not only do you see a definition of retirement, but you’ve indicated the role of and services offered by financial advisers needs to align with this new definition. Can you give us a sneak preview of some of these changes and what you might be elaborating on further during your NAPA conference talk?
Coughlin: The future business of retirement planning will include the traditional core services of ensuring financial security – but will add an entirely new generation of advisory services. The new business of retirement planning will be transformed into longevity planning. Tomorrow’s advisers and related services will take an integrated approach to helping individuals and families navigate decades of life after work. Value added advice will include finance but connect money and planning to specific services in retirement – e.g., career transitions, transportation, housing choices, care-giving.
FN: Give us an idea of what we can expect from upcoming research in your field?
Coughlin: My future work is developing a map of tomorrow’s terra incognita – life after work. It may not even be called retirement. Fewer and fewer people are believing in retirement – at least as it has been defined for nearly a century. A new language of advice, with new experiences, services, and even products, will be required to chart the future of longevity planning. I hope to help financial services invent an entirely new business and value proposition for today’s and tomorrow’s clients – and in doing so reinvent old age to be living longer, better.
FN: Joe, I have to admit, I don’t want to end the interview. There are so many areas to explore on this topic. As Brisco County used to say, “It’s the Coming Thing.” I’m sure I speak for our readers when I say nothing excites like “the Coming Thing.” No doubt those readers attending the NAPA 401k Summit will delight in hearing your full presentation.