The market for longevity finance is growing.
What happens when you’re living longer but not financially prepared? While many of us want to live longer, the idea of working longer to sustain ourselves financially into our late 90s is not an appealing option.
Longevity.Technology: The opportunity for fintech investment is growing as Longevity becomes more mainstream, in the next 10 to 20 years these financial solutions that take increased lifespans into account will become invaluable for an increasing population and provide companies with competitive advantage.
Maintaining the quality of life we are accustomed to, from a financial aspect, is slowly moving into focus: reality is kicking-in. With our lifespans increasing and the acceleration in Longevity technology, how we financially support ourselves in later years is of increasing concern.
Although our spending is thought to decrease as we get older, many companies are just now understanding the scope of the opportunity that healthy aging provides. According to the Office for National Statistics Wealth and Assets Survey, more than 1 in 10 pensioners have a wealth of £1 million or more .
With a growing aging population and fewer people saving, the planning of future finances is becoming an important and untapped opportunity. With most adults between 55 and 65 years old having no retirement savings, future financial stability for the aging population will become a real problem in coming years: the grey timebomb. The main problem is that most people tend to underestimate how long they will live and overestimate how much they have .
“The new longevity also demands greater financial resilience and some flexibility. That’s where creating a financial plan that addresses a range of scenarios can be valuable.” says Hugh Magill, the global director of trust services at Northern Trust .
An option for the individual is a personal pension scheme offered by companies such as Blueprint Income which consists of monthly instalments that guarantee a retirement annuity that doesn’t alter irrespective of any change in the state of the market or how long you live .
In financial markets, one solution being developed by insurers to solve the Longevity finance problem is Longevity swaps, a concept that is about minimizing the longevity risk by transferring to a swap provider some or all the risk of a pension scheme’s members living longer than expected .
Many institutions are looking into risk transfers and additional annuity purchasing to counteract the Longevity risk. New concepts for mitigating the Longevity risks in finance are growing as more companies embrace Longevity and its impact on lifespans.
Options such as Longevity swaps are viable and offer greater security than before. Yet, more effort is required to safeguard the financial state of future citizens according to the World Health Organization, by the year 2020, the number of people aged 60 years and older will outnumber children younger than 5 years . This means the demand on pensions and healthcare systems will increase dramatically and require more solutions to ensure lifetime income in our later years.