Living to 100 and beyond: Implications of longer life spans

North American Actuarial Journal, Jul 2002 by Rappaport, Anna M, Parikh, Alan

ABSTRACT

Life spans have increased remarkably in the last century. There is substantial disagreement and uncertainty among researchers today about the future course of mortality in the developed countries. Will we continue to live ever-longer lives, or is the human life span headed toward a biological upper limit? The answer to this question has important implications for the elderly, their spouses and children, businesses, and our society as a whole. Continued growth in life expectancy with good health would extend our ability to enjoy all the things we cherish.

Simultaneously, this growth would increase our need to prepare carefully for some unexpected challenges. Among these challenges is a greater need by individuals to save for retirement and to prepare for the possibility of becoming dependent upon family members and others for one's care. Businesses will enjoy access to experienced workers and expanding markets among the elderly, while they also will try to control the postemployment costs that longer life spans will generate. Finally, governments will struggle to manage competing interests as the financial needs of the elderly are weighed against other societal obligations.

I. INTRODUCTION

Around the world, the past century has brought substantial growth in the expected human life span. In industrialized countries many people will live past 80, and more and more will live past 100. Healthy adults in their seventies, eighties, and even nineties are becoming increasingly common, and their growth in numbers fosters the expanding view of retirement as a phase of life to be enjoyed rather than endured. More than ever before, the elderly are vital participants in our family lives, our economies as workers and consumers, and our political and cultural lives. Just as increasing longevity has impacted our lives in countless ways, future increases in longevity will create new challenges around the world. These challenges share a common theme: they center on the problem of allocating individual, family, and societal resources most effectively to support our increasing life expectancies.

Much of the increase in life expectancies to date has come from reductions in mortality among children and adults under age 65. Mortality rates at ages below 65 are low today, so that increases in life spans will need to come from mortality reductions at ages over 65. Experts disagree on how much further reduction we can expect, and part of this disagreement is due to the challenges of collecting accurate data and measuring mortality at very high ages-particularly over age 90. Instead of focusing on the problem of measuring and forecasting mortality trends, this paper is concerned with the implications of increasing longevity at the very high ages. By considering these implications, we will create a context for understanding the significance of this research. This paper focuses on the implications of increasing longevity. Two other trends-- declining fertility rates and the aging of the baby boom-in many ways act to magnify these implications, but these trends are not the subject of this paper. This paper is primarily focused on the United States, although there are parallel changes in many other industrialized countries.

Preparing for Increased Longevity

Even if mortality rates cease their long decline, industrialized and developing nations still need to cope with aging populations due to changes in fertility and immigration in past years. The prospect of continued improvements in mortality compounds the challenges of our changing society, forcing even greater diligence in preparing for them. If life spans can indeed continue to increase, and if this change is not accompanied by reduced rates of disability among the elderly, then developed nations need to prepare now for what will be a very different future. The key questions we need to think about include the following:

* How long will people be healthy, and how might disability emerge? What support will be needed?

* What will be the family structures for the elderly, and how many will be widowed or divorced? How can family members help, and what alternatives are there for those without family support?

* How will increasing longevity affect men and women differently?

* How will work and retirement be combined over the life cycle?

* Who is in poverty, and how can we reduce poverty?

* What opportunities are available to business?

* What support will employers offer?

* What support will public programs offer?

* What is the role of the community? Of government?

II. THE ELDERLY, Now AND IN THE FuTURE

Some statistics from the United States can help provide some background on the past and future of longevity in the developed nations:

* Female life expectancy at age 85 grew from 4.9 to 6.6 years between 1950 and 1997. Male life expectancy grew from 4.4 to 5.5 years over the same period.

* The expected number of people age 85 and above is expected to more than triple, from 4.3 million, or 1.6% of the population, in 2000 to 14.3 million, or 3.8% of the population, in 2040.