The coronavirus pandemic is a shocking “intervention” whose biggest impact will show up in retirement planning: The crisis has forced older people to consider the importance of matching health span to life span and think about aspiring to a more streamlined lifestyle, argues Ken Dychtwald, founder and CEO of Age Wave.
The “Pitchman for the Graying Revolution,” as Fortune Magazine dubbed him, psychologist and gerontologist co-founded Age Wave in 1986 to help companies and government develop strategies to serve the fast-growing aging population.
In the interview, Dychtwald, 70, discusses why only a small portion of retirees — most of them in a quandary over financial planning — have financial advisors.
For one, he says, there’s the question of trustworthiness, which needs to be “resolved.”
Author of 17 books, the Ph.D., who has devoted nearly a half-century to the field of gerontology, has a new one due on July 15: “What Retirees Want: A Holistic View of Life’s Third Age,” co-written with Robert Morison (Wiley). It represents the authors’ three decades of research on gerontology and retirement.
In the interview, Dychtwald, whose clients include Allianz, Ameriprise, Bank of America, Charles Schwab, Edward Jones and Merrill Lynch, stresses the need for older men and women to become adept at digital technology both for socializing and medical care, the latter made clear by the pandemic’s lockdown-prompted telemedicine visits.
Dychtwald co-founded Age Wave with wife Maddy Dychtwald upon perceiving that the approaching “age wave,” based largely on the trend of increasing longevity, would shift the focus from younger consumers to the needs of baby boomers and the generation that preceded them.
ThinkAdvisor recently interviewed Dychtwald, a fellow of the World Economic Forum, speaking by phone from Orinda, California, where his firm is based. The Newark, New Jersey, native lamented retirees’ lack of financial literacy and opined that the majority of financial books were of little practical help: “Most people don’t want to get a Ph.D. in economics,” he said. “They want to know what they should do when making financial decisions.”
Here are highlights of our conversation:
THINKADVISOR: How has the pandemic impacted the longevity revolution?
KEN DYCHTWALD: It was an intervention. For the first time in our lives, or maybe ever, everyone in the world was given a near-death experience. Out of the blue a few months ago, everyone was having discussions or thinking about, “What if I die? What if somebody I love dies?” Now they’re giving a lot more thought to what really matters: the essentials for living a good life, a more streamlined life.
The pandemic isn’t just about being sick or losing money. It’s about the psychological impact of: What happens if I can’t earn money or if my kids lose their jobs? We’ve all been given an opportunity to stop and think about what’s really important. For older people, it means paring down to what matters most.
Has the pandemic changed planning for and expectations about retirement?
The pandemic has had the biggest impact on what we used to think of as retirement because now all the pieces on the table are moving around. It’s brought to light the importance of matching health span to life span. People are thinking more and more about the importance of health and what they can do to optimize it.
In your upcoming book “What Retirees Want: A Holistic View of Life’s Third Age,” you cite a study in which 8 in 10 retirees said they were willing to seek professional financial advice about retirement planning — but in fact only half as many work with advisors. Overall, only 26% of Americans have a financial advisor, you write. Why the disconnect?
A few reasons. Some people feel they’re not rich enough to have an advisor. They got that feeling from advertising years ago, which [gave them the impression] that only fancy people have financial advisors. Another reason is that some consumers don’t know who to trust, that maybe financial firms aren’t really concerned about their best interest but just about making money for themselves. That trustworthy theme has got to be resolved.
What other reasons are there for failing to hire an advisor?
Many people don’t like the idea of being scrutinized about how they spend their money or why they may not have saved enough. Or they don’t want to be “looked down on” because they’re heading into their retirement years and haven’t prepared. That’s unnerving and embarrassing for them.
Let’s return to your argument that “the trustworthy theme” needs to be resolved. By whom?
By everyone. The movement of the last few years toward fiduciary responsibility was a step in the right direction. But part of the collateral effect of [Sen.] Bernie Sanders [running for president] and even [President] Trump saying that Wall Street people don’t care about you and are only interested in making themselves richer is that a lot of people don’t know if anyone [in the industry] really cares or will look them in the eye and try to give them a helping hand.