The Longevity Economy

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Hello, and welcome to The Way Forward. I'm Allison Rooney from Barron's, and today we are joined by our guest, Dr. Joe Coughlin. Joe is the founder and director of the Massachusetts Institute of Technology's AgeLab and has spent the past 20 years researching how demographic change, technology, social trends, and consumer behavior drive innovations in business and government. He advised President George W. Bush's White House Conference on the Aging Advisory Committee, as well as nonprofits, governments, and corporations worldwide about how to improve the quality of life of older people and those who care for them. Joe, thanks so much for being here with us today to share your insights.

Al, it's fantastic being here. Thank you.

Great. And Joe, as I mentioned, you're the founder of the MIT AgeLab and author of a book entitled The Longevity Economy: Inside the World's Fastest-Growing, Most Misunderstood Market, where you explored what older adults actually want, not what conventional wisdom just suggests that they need. For those not familiar in our audience, Can you share with us what the key findings from your work have been on this population and what you're currently working on at the AgeLab?

Sure. But everything I say and the research that I stand on with the book is from my great team at the MIT AgeLab, where we look at homes and transportation, the 5-generation workplace, even caregiving. And we'll talk in a moment, I guess, about longevity planning. But the longevity economy is like an emerging market hiding in plain sight. For decades, we've been ignoring it. And what I argue in the book is that old age, unfortunately, is all made up. But here's the punch. The business still doesn't get it. 70% of the consumer spend in the United States, or the third largest global economy, is still only getting 2% of advertising dollars and a lot less innovative thinking about the products that are out there. In fact, the generation that's out there is about a whole new generation gap. Not just about attitude, but about expectations. Think about it. How many of us would say that we are like our parents or our grandparents? We expect a pill, a policy, a product of some kind to be much, much better than ever before. So longevity economy is not just about more older people or more older people with money. It's about an entire innovation gap and opportunity right in front of us.

Amazing. And I'm a really big fan of your work and dig in a little bit deeper on what you're working on today at the AgeLab. And with that, have there been significant changes to the work you're doing given the COVID-19 pandemic? It's—

my team is great. We got like 1/3 every flavor of psychology you can imagine and behavior, 1/3 engineering and data science. After all, we are at MIT. And then 1/3 social work, anthropology, and the like. But we're having a lot of fun not just thinking about the aging population, but going across the generations to ask not how to develop a product or a service for an older adult, Because frankly, we know that if you build anything specifically for an older adult, well, a younger person won't buy it. But guess what? An older person will run with their hair on fire away from it. So, so we're envisioning the home no longer as a place to live, but a platform for service that provides connection and connectivity, if you will, for younger people and care for older people. Mobility that is safe and seamless and sometime in the future driverless. How about a 5-generation workplace where work is no longer, shall we say, for a short period of life, but much longer? And caregiving. At some point, all of us will be either giving care or receiving care. And probably lastly, the thing I'm most excited about is work that I'm leading on longevity planning. It's time to rethink retirement.

That's great. And Joe, as I mentioned, you know, a lot has probably changed given the COVID-19 pandemic for an aging population. What do you think have been the greatest ramifications on this time in the past 5 months?

It certainly has been a surreal summer, let alone an entire year, Els. And the fact is, is that my team has been doing an ongoing rolling survey on consumer behaviors and attitudes across the life course. And here's some things we've been finding. Many people are asking what's going to be the post-COVID world. Well, at the risk of being crass, the post-COVID world looks a lot like what you see it now. I would argue, and the data that we have gathered argues, that the post-pandemic world is going to be, shall we say, accelerated by the pandemic. In fact, think about the pandemic as propellant. Telemedicine, telelearning, and by the way, older people are finding this lifestyle by millennials is not so bad, having things delivered to the home and the like. It's actually pushed us from what we can see 5 to 10 years faster of having technology and related services into the home.

Wow, that's impressive. And can you give us an example of what one of those technologies is that you think has really been accelerated in this time?

Well, the one that I'm most happy about, frankly, to be personal about it, is telemedicine, telehealth. Else, do you know that the idea of being able to do a checkup from your home was actually written about in 1895 in the British medical journal, The Lancet? 'cause this new thing called the telephone might make it possible to monitor heart patients. Finally, we now have the internet coming into the home to give a checkup a day, to bring the doctor and the knowledge and sometimes care into the home. So that, that's actually been pushed forward at an acceleration rate we have not seen in 100 years. We may not like it, but telelearning as well. We're now living in a world where school is never out. There's no excuse. Not to continue learning, not just in time when you're in school, but for a lifetime. So we're seeing dramatic changes that way. And probably the last thing I think it's worth noting is that suddenly that lifestyle that we used to tease millennials and young people about, whether it's food kits or things being delivered to the house, older people were saying, ah, you're lazy. But guess what? Now they like it too. So these things are not just here during the COVID pandemic. I believe these are all here to stay.

Yeah, that's really interesting, and I've actually taken part in telemedicine in the past couple of months and talked to doctors on the phone. I have to say the convenience is extraordinary, and I myself am a big fan. You touched on it a bit, but what do you think the major ramifications are on the other generations other than the elderly of the COVID-19 pandemic? You know, you mentioned education, young kids are going back to school, right now, but what kind of impact does that have on the next generation?

Sure, my team has been looking across the generations because any good research or science has to be comparative in nature, and we found Gen Z, those kids that are in their late teens, early 20s, and the youngest of the millennials that are, shall we say, in their latter 20s, they are the most nervous. They are the most afraid, if you will, largely because, for good reason, they're just getting into the job market and the job market suddenly shut down in many quarters, especially those that are less educated and are on the front lines, if you will. But there's something else that we found that makes sense after you think about it, but it was not quite clear to me. The middle age group, those in their 40s and early 50s, they're being crushed. And what I mean by crushed, they're being crushed by the sandwich generation ties. They're caring for parents that they're concerned about, adult children or younger children that they're caring for, And in fact, they're the ones we identified that made technology the new toilet paper. So while all of us were out there running to get toilet paper, which by the way, in a social psychology sense, actually is rational, they also went out there to buy technology. Not the Netflix and chill kind of technology, but security technology, technology to stay in touch with loved ones, technology that would allow them to order things. In other words, technology now has become the, shall we say, new water and electricity to the home. And I guess the last thing I would mention there, the more you watch, the more you're worried. Our data showed from the AgeLab that the more people were watching the media, the more hours they watched COVID coverage, guess what? The more neurotic they became. And probably something a little bit, shall we say, counterintuitive, those that are most physically vulnerable, the older population, actually showed less concern than all the other populations and age groups. It seems to be that when you're aging, you learn to cope. That's probably a mark of success.

That's really interesting. And I want to bring this back to our audience. What are the implications for wealth managers servicing clients in these times, especially that group you just spoke of? And what are the important conversations that advisors should be having with their clients right now?

Well, I hate to say that I've had fun during COVID but having less time in airports and more time in my study, I've had the opportunity to interview nearly 80 advisors in North America and the UK to find out how are they addressing things with their clients. And it's turned into be an amazing data set and insightful. So there are 3 things that I would argue successful and effective advisors have been doing. First thing is they're showing they care. They made the phone call. And by the way, not just the first phone call and nothing to do with the portfolio, but they made the phone call to say, hey, how are you doing? And then they made another call or perhaps a video call just to check in. But getting closer to the business after they made that connection, then they showed a degree of control after the showing that they cared. They started providing information not just on finances, They started talking to their clients about how to access services that they might need. I had one advisor tell me in Canada, for instance, that they were helping their older clients connect, if you will, to on-demand services that could bring food to the house or get something fixed or get the Wi-Fi up and running, introducing people to telemedicine. And probably the third one, command. And that is, is that frankly, advisors going back to their core business are really working with their clients to, shall we say, Manage stress and tunnel vision. Allison, I don't know if you know this, but when we are stressed physically, we begin to, shall we say, filter out anything from our peripheral view, even physically. But we also start to have tunnel vision on what we choose to hear. We only choose to look at those things that are going to cause us to have fight or flight. So the advisors out there that are showing command in terms of their financial acumen are getting their clients to realize that, look, Things are terrible out there, but maybe not that terrible. Think about what's going on in AI and technology, medical developments, agriculture, and probably more than anything else, we've got a plan, let's stick to it. And if we need to make a change, we'll do that. So the bottom line is, from the advisors I've spoken to across North America, show that you care, show that you're in control, and that you're in command of that person's retirement future.

What in your opinion though, are advisors really at risk of getting wrong with their clients in this environment? Are there any not-to-dos that you'd recommend?

Yeah, and this goes beyond COVID. I think this is a very big issue that spans before COVID and will be here after the pandemic. The first thing is only talking about the market and finances. People can see what's going on on TV. The most important thing is they want to know, do you care about me? So only talking about my portfolio doesn't exactly make this a personal relationship. The other part is, is that realizing that, you know, all media now, we've got text, we've got phone, and video has now become the new normal. I've had many advisors ask me, well, which one should I choose today or in the post-pandemic world? You know, my answer is yes. The answer is the client now knows that you can talk to them more often. And by the way, I'm not saying to talk to them more often at a half hour or hour or more at a time. They are now expecting bites, not breakfast. So speaking to people on video, on the phone, in little pieces of information to make that relationship stronger rather than drawing out over a year saying we need to check in. And probably the last thing is doing well with your clients now will ensure that you keep them. Very few people fire in a stressful time. Very few people get rid of an advisor when they're stressed out. Because if you're there when I need you, I'll keep you. But if you're not there when I needed you, when I don't, you won't be anywhere to be found.

Those are great pieces of actionable advice. I want to transition a bit. You've spoken a lot about redefining retirement and how that's going to look very different for this retiree generation now and the ones to come. Can you give us a fresh perspective of what the major differences will be?

Sure, this is at the heart of my book, The Longevity Economy, and my research on longevity planning at MIT. The first thing that most people don't think about— we've got more time in retirement than any generation in the past. Let me briefly give you just a little bit of mathematics. After all, you did call somebody at MIT. Think about this: from 0 to 21 years old, drinking age, is about 8,000 days. From 21 to midlife crisis, is another 8,000 days. And from midlife crisis— I bet you're getting the algorithm now— from midlife crisis to 65, that's somehow physical law of retirement, is 8,000 days. But here's the thing: more than half of us will make it past 85 and change. Allison, that's another 8,000 days. We're talking about one-third of adult life. So we're going to be living longer than we ever thought before in retirement. We are going to be working longer because frankly, we need the money, but we also need the meaning, the purpose. We know more people at work than we do at home. Expectations. We have greater expectations, not just to live longer and better. Our parents were polite. They went quietly, shall we say, into that good night. And by the way, we had fewer kids. Family is now in short supply. That was the number one way we retired well. And she, typically adult daughters, is either busy, has moved, or given the divorce rate, she's ticked at you and no longer talking to you. By the way, technology is now everywhere before the pandemic and certainly after the pandemic. And probably the thing that we all don't consider very much is that people serving the market today are seeing changes from the fintech world. But really what we're about to see are new companies, retailers and the like getting into the business of retirement in a way that we never thought of before, from delivery to virtual assisted living, maintenance, changing the very nature of how we live, work, and play in retirement.

Joe, in this last 8,000 days you speak of, if folks are living to age 100 and past 65, what are they going to be doing with that time? Are they still working? Do they have a different type of job, a different type of career? Are they spending more time with family? What's your research showing?

And this is the essence, if you will, of longevity planning. It's about what to do with all that time to effectively How do we cash in that longevity dividend where life expectancy in 1900 was roughly 46? Today it's closer to 80 and above. So here's what we're thinking. People are going to be working longer. And unfortunately, those who use their bodies, true work, will have to either change jobs or maybe retirement will be the same for them. But for that vast number of service workers that, shall we say, drive a microphone or drive a keyboard, we may find that we're not just going to be extending work as we know it. We may not have 2, 3, 4 jobs in a lifetime. We may have 2 or 3, 4 or 5 careers in a lifetime. We may find going back to school as a midlife sabbatical becomes more a norm. And by the way, before you get excited about going back on the college campus, no, it's likely to be in your basement online, as we're finding out today. But we have to start thinking about 100 years of living changes everything from how we look at marriage to where we live, how many times we'll move. So it's about education, it's about work, it's about volunteering with Verve. And by the way, the last point, it's the investment opportunity of a lifetime for everyone in industry, finding new products, services, experiences, and activities for this new part of life that has yet to be invented. Is the investment opportunity of a lifetime and the innovation space of a lifetime.

Absolutely. I would think perhaps education institutions could capitalize on this and create more return-to-work programs, especially for those later in their career. Do you think it will have any implications for early education?

Absolutely. We have to start preparing people from the day they're born for 100 years of living. That means education should be about how to learn, not just what you'll learn, an expectation that you need to make the business case to be in the workplace, not just because of seniority, not just perhaps a moral reason that it's right, but are you up to speed on what you need to know, the newest technologies? We should no longer just expect that education stops at 18, 21, or 25 years old. No, we now need to rethink education across the lifespan to remain competitive, productive, and above all, engaged in life.

And how about the institution of marriage? How do you see that changing with such a long lifespan?

Well, we already see the data being a little, shall we say, nerve-wracking for men over age 50, given the fact that all those divorce rates, uh, being initiated by women. By the way, even for my Canadian friends up north, statistics suggest that women up there are dumping their men over age 50 because he simply ran out of gas and that he bores her. So it's not just an American phenomenon. So we're seeing that basically men in particular are going to need to up their game, because one of the things we saw at the AgeLab with research on women— women over age 50 are likely to start new companies. They're likely to go out and find new friends and do new things with this newfound freedom of an empty nest. So guys, it's time to catch up.

And what are your predictions for the age that future generations will live to? I know you mentioned most people are living past 85, but you know, what's your prediction on an exact age in the years to come? And how do advisors need to rethink their approach to helping clients save for retirement when, you know, most people are focused on that age 65 range?

Well, the first piece of advice I'd give everyone is choose your parents wisely.. But the bottom line is, and you may be able to hear this in my, my accent, that even though I'm a proud New Englander now, I grew up in Philadelphia. And being from Philly, tasty cakes, cheesesteaks, and scrapple are food groups. So I may not have to worry about the longevity, if you will. But we do know this, that kids born in the 1990s and beyond, more than half of them are likely to live to age 100. Bottom line is, I think we should all plan for not just a long time, as in well past 85, but do not discount the improvements in diagnostics, interventions, and medicines that have turned once diseases that were a death sentence, like some cancers, now into a chronic condition. Because while you're aging, progress continues to be made. So plan for at least 90 and go up from there, I would argue.

Wow, that's incredible. The upcoming election has huge ramifications for all generations of Americans, particularly retirees. What, in your opinion, are the implications and what should advisors be thinking about as they are having these discussions with their clients about the election?

You know, there's a mythology out there that people love change, innovation, and the like. The bottom line is any election brings change, good, bad, or indifferent, which brings uncertainty. And clients and markets don't like uncertainty. Advisors will be playing a greater role, not just serving as coach as to how do we muddle through the changes in front of us, but perhaps even as more of a calming agent that they have actually developed during the pandemic to stay focused on the positive, to stay focused on what's happening on the outer reaches that are good, not necessarily the things that are right in front of us that may be causing uncertainty. Interesting.

I, I absolutely agree. Before we finish up, I want to talk about one more major topic, and that's women. It was a major part of your book, and we know that women now outnumber men. They're controlling more of the household finances and they're living longer. Help us put into context for advisors, you know, what are the critical elements of this shift in society that they understand and what do they need to change in order to keep up with the times?

Well, you know, it's funny, Allison. My wife and my daughters all roll their eyes when I say this. I have a lot of interest in not just any women, but middle-aged women in particular. She's the Chief Consumer Officer of the House. Think about it. Middle-aged women, as in 47 to 57, thereabouts, control $0.80 to $0.90 on the dollar of health care decisions. Not just choosing your doctor, but your insurance, your medicine, how you do care in the home. Car purchases, 60 to 80%, 60 at the low end. And if it's a luxury car, closer to 80%. She's also responsible for 80% of just consumer spend in general. She's got more degrees in all fields but engineering and quickly catching up and surpassing in that area. But more importantly, from the business of advice and wealth management, she's the number one trusted advisor, not just of her own house, not just of her girlfriends, but to her adult children, her home, and probably has more parents that she's caring for as the number one caregiver after the spouse than anyone else. And by the way, it's not all, shall we say, bright stories for those of us, especially guys like myself in their 50s. Keep in mind, the highest divorce rate in the world is so-called gray divorce. And most of those divorces, they're initiated by— you have one guess— her. She's initiating the divorces. By the way, it's not about sex. It's not even about money. He bores me. So for wealth managers and people in the financial business, they should know that if she's willing to dropkick his butt out the door after 30 years, don't feel that your brand is going to have any more time.

Yeah, and I think that has ramifications too for advisors, that they should be developing diverse teams that speak to, you know, not only the diversity of our country, but to women in particular. We've heard too many horror stories at Barron's of advisors who only speak to, you know, the male spouse and aren't servicing that client appropriately.

And that even goes with body language as well, not just being polite and professional to speak to the woman, but having the conversation as if she's not even at the table, that not only goes wrong, but it's just impolite. And by the way, at the end of the day, chances are the client that's the male is likely to be the first one to get sick or worse. Guess what's going to happen to you the second he's gone?

And you mentioned earlier that, you know, those born in the '90s should be expecting to live to 100. Do you think women will continue to outlive men?

I really worry about women because one of the things that is a myth out there is that younger men are doing more. They're picking the kids up at sports or they're cleaning the house. And if you look at the census data, the bottom line is men are doing marginally more, but she's doing it all across all age groups. And that, by the way, is why women are so important to how we think and plan about retirement. It's not about gender, it's not biology, it's role. She simply does more. And now that she's working, now that she's caring and doing all those other things that keep everyone's lives together, that's a lot of work. That's a lot of stress. I hope she's taking time to care for herself.

Yeah. Well, this has been really, really useful and insightful in a small amount of time. So thank you, Joe, for being here. Before we go, I'd like to ask you to end on one final actionable idea. What's one specific piece of advice that you'd like the audience to take away today from this podcast?

Well, one of the things I would suggest is stop planning for retirement. Yes, you heard me right. Stop planning for it and start preparing for it. Start doing longevity planning where it's not just about financial security, but asking yourself, what are you going to be doing with that time, with that money? Have you identified things that will enable you to provide care, home maintenance, transportation, all those big and little things that go into one-third of adult life? Because retirement's no longer about a vacation trip, a trip to the golf course or the beach walk and a short time at the hospital. It is now 8,000 days. And thank you so much for having me. Let's hope that everyone gets to plan to live longer and better.

That's a great piece of advice, Joe. Thank you. And thank you for joining us today. And thank you all for tuning in. We'll be back next week with another newsletter and episode of The Way Forward.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.