There are few experiences more sobering than walking round a graveyard, surrounded by the mortal remains of your ancestors. Longevity.
My mother’s family were Partingtons and for centuries they lived in and around the industrial town in Greater Manchester from which they took their name. Her own mother died suddenly at 31. The other day, after years of putting it off, I finally visited the grave in Salford’s Weaste Cemetery where the grandmother I never knew is buried.
31 is of course a tragically young age to die. But what struck me, looking at the inscriptions, was how many of Agnes Partington’s generation, and that of her parents, failed to reach the three score years and ten which the Psalmist considered our allotted lifespan.
There was of course the First World War, which claimed the lives of several of my forebears. Accidents were also more common, and so too disease. Many of the graves at Weaste are of those who died in infancy.
Contrast that with today, when average life expectancy in the UK is around 82 years. Over the next 25 years it’s projected the number of people aged 85 and over will more than double to reach 3.6million. The number of centenarians is projected to rise nearly six fold, from 14,000 at mid-2014 to 83,000 at mid-2039. More than one in three babies born today will live to celebrate their 100th birthday.
We ought to keep reminding ourselves how extremely fortunate we are, in the Western world, to be largely untouched by war and to live in an age of rising prosperity and unprecedented medical advances. But there is a price to pay — overpopulation, for example, and a much higher incidence of age-related dementia.
By far the biggest challenge, though, for governments as well as individuals, is how we’re going to support ourselves financially in old age, when many of us will spend 30 years or more in retirement.
According to BlackRock’s Global Investor Pulse survey released this week, those aged between 25 and 34 are underestimating their life expectancy by more than a decade. On average, says BlackRock, millennials will need around an extra £373,000 in their pension pot than their current calculations suggest.
Persuading young investors to put more money away each month will not be easy — especially when most have student loans to pay back, and when (in the UK at least) buying your first home is so astronomically expensive.
Even harder, but just as important, will be pressurising the financial services industry to reduce the cost of intermediation. Make no mistake, there are powerful vested interests out there, determined to maintain the status quo.
Yes, the biggest asset millennial investors have is time. But far too often, to quote Jack Bogle, “the magic of compounding returns is overwhelmed by the tyranny of compounding costs”. As long as those costs stay as high as they currently are, the global pension crisis will remain unsolved.
For all the hardships they had to endure, Agnes’s generation at least had the reassurance that, if they lived to 60 or 65, they could rely on a reasonably generous state pension to support them in their old age. Young investors today don’t have that luxury. And there aren’t many prospects more frightening than spending your 90s in poverty.