Longevity, Your Clients, and You

When Ben Bernanke steps outside the realm of fiscal and monetary policy, it’s sensible to take notice. On April 7 of this year, the Federal Reserve chairman warned a Chamber of Commerce audience that the aging of the nation’s population poses a serious challenge to the economy. Mr. Bernanke cautioned that the U.S. “must begin now to prepare for this coming demographic transition.”

Few people know more about the potential impact of this transition than Dr. Robert Butler, head of the National Institute on Aging at the National Institutes of Health and founder of the International Longevity Center. A physician, gerontologist, psychiatrist, and public servant, Dr. Butler is widely regarded as the preeminent authority on aging and longevity. He’s also the Pulitzer Prize-willing author of six books about issues of aging. (The newest, The Longevity Prescription: The 8 Proven Keys to a Long, Healthy Life, was just published by Avery in May.)

In view of the oncoming demographic juggernaut, I asked this busy 83-year-old pioneer what investment advisors should know about the “longevity revolution,” and what they can do to anticipate older clients’ needs.

What’s the general outlook for baby boomers who are now heading into their older years?

Boomers are going to be in for a shock, because we haven’t started soon enough to address the challenges of aging.

They’re not likely to see the solution to Alzheimer’s disease in their lifetime. They’re not likely to have well-trained doctors to take care of them; they’re not likely to have enough money to live decently. They ought to get up off their you-know-whats and start struggling to get more funds for Alzheimer’s research, to push for training of more doctors to take care of them. They should be pushing the general culture to be more sensitive and not so ageist. They should fight age discrimination. Boomers are not doing any of this.

After 2025, 20% or more of the industrialized world will be 65 or older. We need to meet this challenge head on, and reexamine our views of aging right now.

What can advisors do to help?

I don’t know if it’s within the purview of advisors or not, but they could become advocates for change in these issues I mentioned. For example, only 11 of the 45 medical schools in this country even have geriatrics departments. In England, geriatric medicine is the number two specialty in medical schools.

We have a tremendous opportunity to benefit from the productivity of active, vigorous, robust older people for an extra 30 years. The boomer generation is 29% of the U.S. population. They can transform what it means to live a long life.

What’s the biggest misconception about aging?

The usual perception is that we can’t afford all those old people. We tend to view generational needs as a zero-sum game: if one person gains something, another person has to lose something. That’s very negative and ageist. We need to think about the senior or mature market as the Japanese do, as a resource to develop and exploit.

Older people should probably plan to work longer than they envisioned. The contribution they can make is very valuable. Politicians talk about Social Security and Medicare as “an intolerable burden” that has “handicapped the young.” We brought Social Security actuaries to testify in Congressional hearings in 1979. It’s very obvious and striking that if people stay in the workforce longer, they put more money into the system and take less money out.

In my view, a new body of thought is not receiving the attention it needs. Studies by the University of Chicago, the Rand Corporation, Yale, Harvard, and our own International Longevity Center show that nations where the inhabitants live longer create more GDP.

Think of the older generation’s spending on travel, college, grandchildren, life insurance, medical procedures–cataract surgery, hip replacements, and so on–assisted living and other housing arrangements…these are all related to age and all create wealth. So my argument is: we can afford old age, and we need to get off the position that we can’t.

What’s the most important issue around longevity that we need to address?

There’s a revolution in longevity–but we could lose it. What good will it do to live longer if we don’t learn to treat each other better?

First, longevity is desirable if it’s accompanied by a life of high quality. Second, most people, if they have a choice, would opt for longevity of the mind.

Not to become senile, in other words?

People used to think senility was inevitable with aging, but the 10-year Human Aging longitudinal study showed that what we called senility was actually a disease. Meta Neuman, a neuropathologist, discovered Alzheimer’s pathology in the brain.

Knowing that half of the people in nursing homes had this condition, I began working to make Alzheimer’s disease a major national priority, and later helped found the Alzheimer’s Disease Association.

Surprisingly, no one had ever dealt with Alzheimer’s up to then. It’s the most common form of dementia, but there’s no evidence that it’s more frequent than before. It’s simply that more people are surviving into old age, where they become more susceptible, and we are getting better at diagnosing it.

To attack Alzheimer’s, we need a better understanding of the role of genes and cells, of our own wiring, of behavior. I am in favor of our country sponsoring a public/private research initiative called “The Century of the Brain” to understand the brain and dementias. Let’s see how innovative we dare to be.

How will the growing cohort of people in their 60s and 70s change the country?

Dramatically! In terms of sheer numbers, one out of every four adults will be over 65. Just as when you have a very youth-oriented culture–think of China’s one child policy, which has produced a generation of “little emperors”–now, just by sheer numbers, we’ll have more of a consciousness and focus on aging.

Economically, we’ll face the reality of increased Social Security costs, but these are predictable. If people stay in the workforce longer, it will help the solvency of Social Security, or might even rescue it.

I also see cultural change. Older people have a life to look back on, while younger people are mainly looking ahead. Our cultural focus may become more retrospective, thinking about wonderful times or not-so-wonderful times. Maybe we’ll have more movies with love stories of older people. Novels and musicals might include more older people as central to the plot.

Otherwise healthy folks may have physical limitations, so I would look for more special-access provisions across our society. In fact, the whole infrastructure needs to be reengineered to cater to older people. We are made weary by speed and efficiency 24/7: the Internet, cell phones, overtime.

Regarding overtime, working hours may change. There’s a marked contrast between the “live to work” bias in the U.S. versus other countries’ focus on “work to live.” We give workers an average of 12 paid vacation days a year; in Italy, it’s 40. Time is the ultimate currency, as Daniel Kahneman has said, and boomers who are still working may well want more of it in their compensation.

I’ve been speaking of longevity as an American revolution, but the whole world is going gray, not just the United States. China will be in for a real shock: in 2030, they will have between 230 and 240 million people over 60. They are not prepared with caregiving or health care systems.

How about our health care system–will it take better care of older people?

Our health care system is a mess. Twenty cents of every dollar we spend does not go to improve health. Over the last couple of decades, the U.S. has dropped from 11th place to 42nd place in life expectancy.

So far, it’s not the age of the population that’s causing the problems; it’s new drugs and new technologies and the commercial health insurance industry. I am in favor of nonprofit insurance industry funds, which support the systems in France and Germany.

By the way, there is a perception that the European social welfare model is grounded in altruism.The fact is that these systems were developed in order to assure a secure, healthy workforce. Universal health care isn’t the enemy of capitalism. It originated to help support capitalism.

There’s a strong relationship between healthy longevity and wealth. Healthy children who become healthy adults have good jobs, save more, have a healthy old age. Imagine the economic value of an individual who can continue to be productive, to invest and give back, all his life.

We should be focusing our medical research on diseases that degrade the quality of life in older age: arthritis, sinusitis, ALS, Parkinson’s, and of course Alzheimer’s. And as organ replacement becomes more commonplace, I think people getting driver’s licenses should have to opt out of being an organ donor, instead of opting in.

What kind of legacy do today’s older people want to leave the next generation(s)?

When older people reminisce, it was once thought to be boring or senile. But when I wrote a paper in 1963 entitled “The Life Review,” it was apparent to me that reviewing one’s life, asking oneself, “How will I be remembered?,” and making sense of a life journey and a life experience, was a very significant psychological matter.

In the best of senses, older people want to leave their children good health, a reasonable environment, a reasonable economy. They join the Peace Corps; they’re involved in volunteer activities in their communities. Grandparents play a terrific role with their grandchildren, both in terms of financial support and caregiving.

One of the best legacies could be to show the disadvantages of a sedentary life–to help combat the obesity epidemic among the younger generation. I think advisors have to be direct in saying to older clients, “Your future depends on how you are now, and the childhood you experienced. You can’t change your childhood, but you can influence your grandchildren in terms of diet, exercise, and a healthy lifestyle.”