A 100 Year Life

In one week, I’ll be turning 50.

Coincidentally, or perhaps serendipitously, I attended a seminar last week where Aegon delivered a presentation on their report, The Second 50 - Are Your Clients Financially Prepared to Live Another 50 Years?

That report was inspired by a book I’d actually read a few years ago, The 100-Year Life. The book challenges the traditional three-stage life model - education, work, retirement - that many of us have followed.

But this model is fading fast, especially as one in four children born in the UK today can expect to live to almost 100. As life expectancy increases, it’s clear that a single, linear career path no longer suits the reality for most people.

I see this change all around me: friends and former colleagues are increasingly moving between careers, some by choice and others by necessity. In fact, I may be part of the last generation to experience a more straightforward structure of life, while the generations that follow will face a far more varied journey, likely involving multiple careers, the gig economy, and diverse income streams.

To understand what this new work-life structure might look like, let’s first consider the old framework - the traditional three-stage life model.

The Traditional 3-Stage Life Model 

For much of the 20th century, life followed a predictable pattern. This three-stage model suited a time when life expectancy was shorter, and the concept of a long retirement phase didn’t yet exist.

1. Education: This stage is spent in school, university, or vocational training, preparing individuals for the workforce. It typically lasts until the early 20s.

2. Work: After education, most people embarked on full-time careers, often staying in the same or similar line of work for decades. This phase traditionally spanned from the early 20s to mid-60s, focused on career advancement, financial security, and eventually preparing for retirement.

3. Retirement: The final stage, retirement, would typically begin around 60 or 65. Savings and pensions funded a quieter life of leisure, often seen as a reward for years of work, with the expectation that it would last for about 10-20 years.

For my generation, this model still holds sway, but with people now expected to live significantly longer, it’s no longer a realistic blueprint.

Today, people reaching 50 in the UK have an average of 36 more years ahead of them, highlighting the need for a new structure to accommodate longer life expectancies.

The Shift to a 5-Stage (or More) Life 

The 100-Year Life proposes a flexible and dynamic approach to life stages that reflects these changes. A three-stage life model doesn’t suit a world where people could live to 100 or more. Instead, we’re shifting towards a multi-stage life where careers, education, and personal development happen in cycles. Here’s what this new 5-stage model looks like:

1. Childhood and Education: This stage remains relatively unchanged, though today, there’s an increased focus on skills like emotional intelligence, adaptability, and lifelong learning to prepare for varied career paths.

2. Early Career Exploration: Rather than diving straight into long-term careers, many people will experiment with different roles and industries, discovering what suits them best. Building diverse skills and experiences is crucial as it offers more flexibility in an evolving job market.

3. Mid-Life Re-Evaluation and Re-Skilling: Many in my generation find themselves here today, reflecting on what they truly want from life. This phase often includes career changes, returning to education, or starting new ventures. With industries evolving rapidly, re-skilling is critical for staying relevant in the workforce.

4. Late Career and Active Pre-Retirement: Instead of stopping work entirely at a set age, many will transition into part-time roles, consultancy, or similar positions that leverage their accumulated experience. A phased retirement replaces the traditional “hard stop” at 65, allowing people to balance meaningful work with personal life.

5. Post-Retirement and Active Ageing: Retirement is no longer just about winding down. People are staying active longer, often pursuing hobbies, volunteering, or continuing casual work, making this stage one of personal fulfilment and engagement.

Making the Most of Our Second 50

This shift from a three-stage to a multi-stage life model brings both challenges and opportunities across generations. Each generation faces unique questions around careers, finances, and relationships, all demanding a fresh approach.

• Baby Boomers are redefining retirement, often blending part-time work, consulting, or volunteering with leisure. This flexible approach helps them balance wealth and health in later years while adapting to longer life spans and evolving personal goals.

• Generation X finds itself at a crossroads, torn between the traditional retirement expectations of past generations and the evolving career paths needed today. With many Gen Xers anticipating longer careers, re-skilling and creating diverse income streams are becoming essential.

• Millennials and Gen Z are fully embracing new work structures, including the gig economy and multiple income streams. However, they face unique challenges, such as high living costs and housing barriers, that demand constant adaptation and financial resilience.

To thrive across these extended life stages, The 100-Year Life highlights essential “intangible assets” that go beyond financial stability. These assets support personal development, resilience, and adaptability:

• Productive Assets: Skills, knowledge, and competencies that remain relevant in a dynamic workforce. Lifelong learning and skill development are crucial to maintaining employability and career flexibility.

• Vitality Assets: Physical health, mental well-being, and fitness. A longer life requires us to prioritise health through exercise, nutrition, stress management, and a healthy work-life balance to ensure quality of life in later years.

• Transformational Assets: The ability to embrace change, adapt, and take calculated risks. With multiple transitions ahead, resilience and openness to new experiences are essential.

• Social Assets: Strong relationships and social networks that enhance health and happiness. Nurturing family, friendships, and professional connections provides support and enriches life at every stage.

• Emotional Assets: Self-awareness, empathy, and emotional resilience. Understanding oneself and managing emotions effectively supports both personal and professional growth, helping to navigate life’s inevitable challenges.

Investing in these intangible assets allows each generation to build a resilient and fulfilling life. This framework offers a holistic approach to the second 50 years, helping people find balance and purpose as they navigate the challenges of a 100-year life.

Financial Implications of a 100-Year Life

With people living longer, financial planning becomes more complex and critical. Today, those reaching age 50 in the UK have an average of around 36 more years ahead of them, which means many could be in retirement for 25–30 years. This extended lifespan not only shifts the age for retirement planning but also significantly increases the savings required to support a longer, active life.

• Increased Years in Retirement: Historically, the average retirement was expected to last around 15-20 years. Now, with life expectancy rising, retirement could span 25-30 years or more, adding over a decade to the time people need to fund without a regular income.

• Required Pension Pot Growth: To maintain the same quality of life in retirement, the required pension pot size must increase substantially. A rule of thumb suggests that for each additional year in retirement, the pension fund needs to increase by around 5-10%. This means that a retirement fund once deemed sufficient for a 20-year retirement may need to be up to 50% larger to account for a 30-year span.

• Higher Savings Rates Needed: The traditional recommendation to save 10-15% of annual income may no longer be sufficient. For younger generations who expect to live well into their 90s or even 100s, some financial experts suggest savings rates closer to 20-25% of annual income to build a robust financial cushion.

• Adjusting for Inflation and Healthcare Costs: With an extended retirement, inflation’s impact on purchasing power becomes more pronounced. Additionally, healthcare expenses are expected to account for an increasing portion of retirement spending. For instance, people may need to allocate around 15-20% more to their retirement funds specifically for healthcare costs, which become more significant in later years.

Strategies for Long-Term Financial Security

Given these financial demands, individuals at every life stage need to adopt a more flexible and proactive approach to financial planning:

1. Start Early and Prioritise Saving: Beginning retirement savings as early as possible remains one of the most effective strategies. This allows compound interest to work in your favour, helping to grow your pot significantly over time.

2. Build Diverse Income Streams: Given the likelihood of phased retirement, building multiple income sources—including part-time work, consulting, or rental income—can help bridge gaps and reduce reliance on pensions alone.

3. Invest in Skills and Re-skilling: Investing in continuous learning not only builds intangible assets but also opens up career options later in life. This flexibility can help supplement income during retirement.

4. Consider Long-Term Care Insurance: As people are spending more years in retirement, healthcare and long-term care costs are becoming major expenses. Long-term care insurance or similar products can be helpful in covering potential care needs without drawing down retirement savings too quickly.

With a multi-stage life, retirement is no longer the “end” but rather one of many stages. Financial strategies must evolve to accommodate this, ensuring that people can enjoy financial security alongside the flexibility and adaptability required for a 100-year life.

A New Approach for the Next 50 Years

For me, turning 50 feels like the perfect moment to pause and reflect on how to make the most of this new life stage.

The 100-Year Life introduced me to the idea that we may live much longer than previous generations, and the Second 50 seminar helped cement the importance of planning for that reality.

Whether you’re nearing 50 or just beginning your journey, it’s time to rethink what the next stages of life could hold.

We are stepping into uncharted territory, where the boundaries of work, retirement, and personal growth are more fluid than ever before. Preparing for this new reality means embracing flexibility, adaptability, and a fresh perspective on what makes life meaningful.

By investing in both financial security and intangible assets, and being proactive in planning for these extended years, we can shape the second half of life to be as rich and fulfilling as the first.