Increased Longevity Calls for New Planning Approach: Transamerica and the MIT AgeLab

By Jake Guldin

According to findings from a survey conducted jointly by Transamerica and The Massachusetts Institute of Technology, or MIT, AgeLab, the revelation that people are living longer necessitates a reconfiguration of lifetime planning. It is crucial that people, regardless of current age, account for both the near-term and distant future.

To accomplish this, the researchers recommend a novel, cyclical framework consisting of anticipation, preparation and celebration.

During the Anticipation phase, an individual is cognizant of the opportunities and challenges they may face later. Throughout the Preparation phase, a person pursues actions to ensure that basic necessities and wildest desires are met. Finally, during the Celebration phase, someone revels in the accomplishments resulting from proper planning and superb decision-making.

This cyclical approach, unlike the conventional linear one, accounts for how people operate in our modern age.

“As people experience different things and they learn about different things, they learn to like different things, they learn to like working differently,” said Phil Eckman, president of Transamerica’s Workplace Solutions division. “They go through this kind of transition.”

In addition, the study reveals how thinking in terms of life phases — younger adulthood, midlife and older adulthood — can be advantageous, allowing us to better understand how our wants and needs change over time. After all, a retiree’s priorities, for instance, are bound to be drastically different from a college student’s.

Here’s how.

Younger Adulthood (Ages 20-39)

Unlike their older counterparts, this youthful cohort is heavily invested in their well-being. From meditation to gym memberships, those in this age range are focused on improving their mental and physical health.

In fact, a whopping 35.7% of younger adults reported spending more than $100 per month on well-being-related expenses. For older Americans, this number is much smaller.

Interestingly, this group is adamant about adopting healthy habits not just for the present, but for the rest of their lives.

As it pertains to work, Millennials and Zoomers are interested in transitioning from entry-level positions to advanced roles by any means necessary.

To achieve this, they are willing to switch employers or, in some cases, entire fields. In addition, a substantial portion of those surveyed (82.3%) have expressed at least some desire to learn new skills or change career paths via higher education or specialized programs. Though such a choice is becoming commonplace, there are pros and cons to consider.

“It’s important to follow your passions and follow where your interests are. That’s extremely healthy,” Eckman said. “You just want to make sure that it’s not creating some kind of insurmountable, liability debt problem.”

Younger adults are also determined to work in areas that they are passionate about — even if it means sacrificing a bit of income. Salary and wages, though important to them, were less frequently chosen as a top priority (especially in comparison to the midlifers and older adults).

In terms of finances, younger adults are, unsurprisingly, focused on the present and not-too-distant future. They’re focused on adjusting to and learning about the economic ramifications of independent living, employment and debt.

That said, the survey revealed that Millennials and Zoomers are increasingly interested in receiving guidance on daily budgeting, passive income and retirement savings. This signals a potential change in anticipation, highlighting how more of the youth are taking longevity seriously.

With this in mind, financial professionals need to reinforce the importance of what’s happening in the present — student loan repayment, credit card management, etc. — while introducing saving tactics for the future.

Midlife (Ages 40-59)

Unfortunately, the reported well-being of midlifers is considerably worse than both younger and older adults. Often forced to care for aging parents and children of various ages, those in their 40s and 50s struggle to find the time to care for themselves.

“With this middle adult cohort, one of the things that stood out to me was the fact that they just have everything coming at them and it’s all real,” Eckman said. “So, not only is life real and kids and football practice and debt and mortgage payments and everything else, but you also have this longer-term horizon, which can be a little ominous if you’re not prepared for it.”

Given these stressors, then, it comes as no shock that people in midlife reported the lowest rates of healthy eating and regular exercise. Only 9% in their 40s, for example, said that they eat healthily on a regular basis. Similarly, a mere 11% claimed to exercise daily.

Additionally, they cited social stress, with those from this age range being the most likely to state that they have no friends. Middle-aged men, in particular, face this struggle.

However, it should be emphasized that individuals in midlife are aware of their predicament and are determined to fix it — especially with the onset of chronic conditions such as rheumatoid arthritis.

Due to their roles as caregivers, midlifers prioritize salary and flexibility when it comes to employment. These both reflect how those between the ages of 40 and 59 are preparing for retirement, in their peak earning years and dealing with the financial imperatives associated with caregiving and child-rearing.

Midlifers are also hyper-focused on retirement, with 74% of those in their 50s saying that it is essential that they have enough saved to one day leave the workforce. That said, only about 57% expect to have enough to retire.

Such a statistic comes as no shock when considering how midlifers are inundated with debt (student loans, mortgages, etc.), “catch-up” contributions and more. As a result, this coalition is, when it comes to finances, intrigued by information concerning debt management and retirement.

Older Adulthood (60-79)

For retirement-age people, well-being is highly valued — 65.5% stated that they eat healthily frequently or daily, for instance. In addition, nearly all exercise frequently or daily. Though, it should be noted, those in their 70s were more likely to do so than those in their 60s.

Mental health is of similar importance: 56% of older adults said that avoiding stress is of grave importance to them. Despite this, though, many people from this age range are afraid to talk about the likes of depression, anxiety and loneliness.

Though you are likely not a mental health expert, there is still plenty that you can do to help as a financial adviser, family member or friend.

“It’s a difficult topic for a financial adviser to jump into that complex mental health conversation,” Eckman said. “But, I think by at least trying to get the issue on the table, just to help people recognize that they should be thinking about this … It’s healthy to acknowledge it and be aware of it.”

A large portion of older adults (over 40%) engage in cognitive training, completing crossword puzzles and sudoku in an effort to keep their minds sharp. They additionally value socialization and emotional stability.

Although many older adults have left the workforce — with nearly 58% of retirees in their 60s and 70s revealing that they did so earlier than expected (due to unexpected health problems, life-altering events, etc.) — there are still plenty who remained employed. Of those still working, the majority said that financial benefits — income, medical insurance, etc. — were the reason for their continued employment.

For those still diligently working, retirement is still a top priority — 68.4% described doing so as “very” or “extremely” important.

For finances, older adults reported the greatest stability and confidence. With their working years behind them, those from this group are focused on the decumulation of assets.

That said, they still cited the need for financial assistance, with many craving information about Social Security and Medicare, amongst other government programs. Furthermore, a plurality of older adults claimed that long-term care insurance is the financial product at the top of their wish lists.

For more information, visit Transamerica’s website!

TheStreet’s Retirement Daily published this article on Sept. 11, 2023.