A quick googling of the term longevity — meaning long life — yields some

interesting results. One article spotlights residents of the Greek island of Ikaria,

one of the so-called “blue zones”— small areas around the world where residents

frequently outlive their life expectancy by more than a decade.1 Another highlights

Texas centenarian Pearl Cantrell, who swears by her daily dose of bacon as a

contributor to her long life. “It’s got to be crispy,” she told a recent interviewer.2 A

third features genius inventor and entrepreneur Ray Kurzweil, who plans to live

forever with the help of 150 pills a day and a supercomputer backup of his brain.3

As interesting — and quirky — as these stories are, seeing them merely as curiosities

may cause us to ignore evidence that increased longevity is already underway and

that we may enjoy surprisingly long lives. In fact, life expectancy in developed

countries like the U.S. has been — and is expected to continue — rising at a rate of

2.5 years per decade: 3 months per year, 6 hours per day.4

Scientists, medical technologists, and statisticians are clear that increased longevity

has already broadly taken root. Life expectancy in developed countries increased

by three decades over the course of the 20th century alone. Children born in 1900,

1950, and 2000 in the U.S. were expected to see 47.3, 68.2, and 77.0 years of age,

respectively.5 Today, without any further improvement in longevity, three-quarters

of newborns will mark their 75th birthdays. More than half of babies born today in

rich nations will live for 100 years.6

However, this is not simply a story about better health care for children; much of

this increase in longevity is the result of a decline in mortality after age 80, which

means that people are living and staying healthy longer.7 Based upon current life

expectancy tables, a 65-year old female has a 50 percent likelihood of living to age

88, a 25 percent likelihood of living to 93, and a 10 percent likelihood of living to

97. A 65-year-old man has a 50 percent likelihood of living to age 86, a 25 percent

likelihood of living to age 91, and a 10 percent likelihood of living to 95.8 Better

elder health care has lengthened lives by allowing earlier diagnoses and better

treatment of illnesses such as heart disease, cancer, and diabetes. Public health

campaigns against smoking have also aided longevity.9

November 2013

strategic research report

longevity and the future of retirementJohn D. Curry Senior Director, CAPTRUST Marketing

continued inside

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If you take it as a given that advances in medicine and technology

are conspiring to give us longer lives, your likely (and legitimate)

next question is: So what?

One result of increasing longevity is a distinctly older America.

The U.S. Census Bureau reports there are more Americans age

65 and older than at any time in U.S. history. Its 2010 report

indicated there were 40.3 million people age 65 and older in

2010, up from 35 million in 2000 and just 3.1 million in 1900.10

That amounts to more than 13 percent of the U.S. population or

more than one in eight Americans. Looking ahead, this number is

projected to increase to 54.8 million in 2020 and 72.1 million by

2030 — representing more than 19 percent of the U.S. population

of retirement age.11

Yet, even today, the idea of retirement is fading — for reasons both

good and bad. Many Americans whose savings were adversely

affected by market turmoil over the past decade are choosing

to retire later.12 Meanwhile, others — facing the prospect of as

many as 30 or 35 years of life post-paycheck — are rethinking the

nature of retirement itself. Regardless of the cause, if we do, in

fact, live longer and stay active well into our 80s and 90s, it begs

the question of how we will spend our time.

The supply and demand for labor are central to this debate.

As a demographic cohort, the baby boom generation (the

81 million Americans born between the years of 1945 and

1964) represents 38 percent of today’s working population

with almost 60 million participating in the workforce.13 As the

boomers begin to retire in the near term — the youngest is

approximately 50 years old — employers may be hard-pressed

to find suitable replacements.

As Figure Two suggests, while boomers can be replaced by

younger workers, generation X may not be sufficient in size — at

“only” 49 million — to sate demand for experienced workers.14

As this imbalance plays out, employers will need to reengineer

their work arrangements to entice their older and more

experienced workers to remain engaged in the workforce.

Several broad possibilities exist:

• Worklonger.

Employers may actively encourage employees to continue career

work on a full-time basis well beyond today’s average retirement

age of 61.15 The prospect of staying active at work while

providing additional years of savings and accrual of Social

25%

38%

32%

5%

Figure Two: United States Total Labor Force Participation by Generation, 2010*

Mature/WWII Generation (age 67+)

Baby Boomers (age 47-66)

Generation X (age 32-46)

Generation Y/Millennials (age 12-31)

Source: Bureau of Labor Statistics, “Household Data, Not Seasonally Adjusted: Table A-13: Employment Status of the Civilian

Noninstitutional Population by Age, Sex, and Race” (2012)

continued from cover

Security benefits may be appealing to many. Some may consider

this option for access to affordable health insurance alone.

• Flexibleworkarrangements.

Fearful of losing their most experienced workers and knowledge

base, employers may opt to allow part-time work for employees

into their late 60s and early 70s.16 This phased retirement

approach will allow these employees to continue working on a

basis that helps them maintain social and economic connectivity

to their workplace with enough free time to enjoy more

traditional retirement pursuits.

3

continued on back

Competition for skilled workers will heat up as some employers

provide flexible arrangements and embrace retirement-age

employees, while others lag behind the trend. However, many

retirement-age workers may choose to embark upon a path

entirely different from their chosen career. Options for

recareering are numerous and include everything from working

at (or starting) a not-for-profit to incubating a new business

to returning to school to build an entirely new set of skills

and knowledge.

The impact of our aging population on Social Security and

Medicare, our so-called social safety net, is already front and

center in the current U.S. budget debate. A vast number of

Americans depend on these programs as their primary means of

support in retirement. That number will grow significantly in the

future, simply as a function of the number of Americans reaching

the ages at which they are eligible to receive benefits. Pundits

estimate the long-term deficits of Social Security and Medicare

at $9.6 and $34 trillion, respectively, over the next 75 years —

unless action is taken to improve their economics.17, 18

Potential fixes for these programs include cutting benefits, means

testing, upping eligibility ages, and increasing contribution rates.

More than likely, the resolution will be some combination of

all of the above. Any resolution will put increased pressure on

individuals to take action to plan, save, and invest for their own

retirements, either through employer-sponsored retirement plans,

personal savings, or a combination of both.

Whileitishardtoimaginenotfindingasolutionfor

futuregenerations,individualsorfamilieswouldbe

wisetodothefollowing:

• Saveasifyouplantolivealongtime.

Rather than leaning on backward-looking benchmarks like the

average retirement age or life expectancy, chart your own path.

Plan to retire when and how it makes sense for you, and don’t

underestimate longevity. Anticipate a retirement that could

last 25 or 30 years — just to be on the safe side — and make

sure you understand the amount of savings necessary to sustain

your lifestyle.

• Investforthelonghaul.

While many early- and near-retirees seek refuge from market

volatility in a more conservative investment portfolio, they may

inadvertently expose themselves to a different set of risks.

Notably, they may expose themselves to the risk of running

out of money (also known as longevity risk) and the risk that

inflation — especially healthcare inflation — erodes their

purchasing power.

Figure One: Number of Persons 65 and Over 1900–2030 (numbers in millions)

Source: U.S. Department of Health and Human Services, Administration on Aging, “A Profile of Older Americans: 2011”, 2011.

3.1

1900 1920 1940 1960 1980 1990 2000 2010 2020 2030

4.99

16.6

25.531.2

3540.3

54.8

72.1

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material in this publication may be reproduced in

any form without the express written permission

of CAPTRUST: 919.870.6822.

©2013 CAPTRUST Financial Advisors

The opinions expressed in this report are subject to change without notice. This material

has been prepared or is distributed solely for informational purposes and is not a solicitation

or an offer to buy any security or instrument or to participate in any trading strategy.

The information and statistics in this report are from sources believed to be reliable but

are not warranted by CAPTRUST Financial Advisors to be accurate or complete.

CAPTRUST Financial Advisors does not render legal, tax, or accounting advice.

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The prospect of living a long, healthy, and happy life presents an

exciting opportunity. While Pearl Cantrell may credit her long and

productive life to her three-piece-a-day bacon habit, for most it

will not be that simple. Given the likelihood of longer lives and

the probability of Social Security and Medicare rollbacks in the

future, individuals will bear a larger burden for their retirement and

healthcare funding. Financing an extra five or 10 years in retirement

will challenge many retirement-age individuals; however, delayed

or phased retirement and recareering may be attractive options for

those interested in continuing to work — albeit on more friendly

terms. For most, it will take thought, planning, and discipline to

build a successful retirement.

Wewelcometheopportunitytospeakwithyoumoreabout

longevityanditsimpactonyourretirementplan.

continued from inside Sources:1 http://www.nytimes.com/2012/10/28/magazine/the-island-where-people-forget-to-die.html2 http://www.today.com/food/its-got-be-crispy-woman-105-says-bacon-key-longevity-1C98460503 http://online.wsj.com/article/SB10001424127887324504704578412581386515510.html4 http://www.demogr.mpg.de/en/laboratories/survival_and_longevity_12/5 http://www.census.gov/statab/hist/HS-16.pdf, “No. HS-16. Expectation of Life at Birth by Race and Sex: 1900 to 2001”6 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGCHVoAxPlu87 http://www.demogr.mpg.de/en/laboratories/survival_and_longevity_12/8 Institution Retirement Income Council, “The Problem with Living Too Long”, Volume 2, Number 6, 20109 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGCHVoAxPlu810 U.S. Department of Health and Human Services, “Administration on Aging, A Profile of Older Americans: 2011”, 201111 Ibid.12 http://www.gallup.com/poll/162560/average-retirement-age.aspx13 Bureau of Labor Statistics, “Household Data, Not Seasonally Adjusted: Table A-13: Employment Status of the Civilian Noninstitutional Population by Age, Sex, and Race”, 201214 Ibid.15 http://www.gallup.com/poll/162560/average-retirement-age.aspx16 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGCHVoAxPlu817 http://cnsnews.com/news/article/social-security-faces-96t-unfunded-liabilities-83894-household18 http://online.wsj.com/article/SB10001424127887323393804578555461959256572.html