Not a week goes by without a family expressing their concern about the rising costs associated with ageing. This concern is usually raised by the older members of the family, since they are the ones who currently face or will soon have to face these expenses—costs that, in most cases, do not decrease later in life and are perhaps not always fully considered in financial planning estimates.
We all realise that life expectancy is on an upward trend, and forecasts suggest that this pattern will continue. Naturally, this is always great news—everyone wants to live longer and in better conditions. Thanks to medical advances, improved living standards, and a growing societal focus on health and well-being, these goals are being achieved. However, it is not just about living longer and better, but also about doing so with good financial health. Longevity is profoundly transforming economic, social and individual dynamics, and both governments and families must address these new realities.
On the one hand, governments have been considering for years how to deal with this new social reality, where the years of retirement equal or even exceed the years of work. The raising of the retirement age or the introduction of new flexible formulas for accessing it are some of the measures adopted in Spain to try to cushion the costs resulting from these new situations. Maintaining the welfare state in all its aspects now requires a rethinking of traditional models.
On the other hand, families are also being called to rethink traditional planning models. As mentioned, the retirement period is getting longer, but this is often coupled with the fact that many children, still not financially independent when their parents retire, remain dependent for longer due to the increasing age at which people start their own families. These realities require being better prepared than previous generations to face potential unforeseen events and expenses related to ageing.
Achieving these objectives will require planning and investment strategies that ensure the preservation of wealth, as well as the ability to generate returns to cope with the years in which income is expected to decrease. To do this, it will be necessary to assess the current distribution of wealth to determine if it is consistent with the desired goals.
When evaluating today’s reality and planning for the future, relying on qualified professionals will make a difference. They can assess the measures that have to be taken based on the different scenarios the family might face, ensuring that the available resources are sufficient for longer.
This study and planning should not be carried out exclusively in later years; rather, I would recommend the opposite. Future generations must learn from current situations and work on their planning, taking longevity into account. Educating younger people to manage wealth in a way that guarantees a sustainable standard of living over longer periods will be crucial to facing longevity and the unforeseen events associated with it.
The market is also not immune to this reality, and it is increasingly focusing on longevity in at least two ways. On the one hand, by offering products designed to cover future needs, such as savings insurance plans or annuities that will complement public pensions in the future. And on the other, by encouraging investment in assets that will likely be in demand by longer-living individuals. As a result, investment in care services or retirement homes has increased in recent years.
In short, there is an urgent need to make changes in the planning of individuals, families, and society itself in order to adapt wealth and sustain one’s standard of living over a much longer period of time.
Citywire 03.04.2025