How Tech Innovations Will Disrupt Retire

Guild Investment Management  |

The meaning of retirement is shifting. The process accelerated in the aftermath of the Great Recession, but the trend was already in place in the early 1990s:

Data Source: Bureau of Labor Statistics

As the chart above shows, the 16-to-64 age cohort has been slowly diminishing as a proportion of the entire workforce, but the representation of the 65+ cohort has grown dramatically, and is anticipated to continue to continue that dramatic growth.

There are two converging trends: first, retirement is coming later in life; and second, “retirement” no longer necessarily implies a complete exit from the labor force.

Driving these trends are two underlying phenomena, one positive and one negative. First, lifespan is increasing, but more than that, “health span” is increasing -- people are not just living longer, but as they live into that greater life expectancy, many are experiencing greater health and vigor. An increasing number of these older Americans enjoy their ability to stay productive and simply see no reason to stop working.

Second, though, is a sense of financial insecurity among many older workers. 45 percent of working-age households have retirement accounts such as an IRA or 401(k); among those near retirement age (age 55 to 64), the average family that has no such retirement account has $12,000 in savings. The reality is that many in this demographic will need to continue working past the age of 64 because they have no choice.

So whether from preference or necessity, older Americans are working longer, and the trend looks likely to continue and to strengthen. We’ve often written in this letter about the effects of aging demographics on economies and the likely tailwinds they will generate for industries like healthcare, as well as the headwinds some think they will generate for economic growth (we’re skeptical about that, as you’ll see below).

In a way, this is nothing new; “retirement” is a relatively recent invention. For most of human history, older people remained productive until near the end of their lives, and a period of 20 or 30 years of idleness would not have been considered normal or desirable. Now, though, they will enjoy better health and have more productivity-enhancing tools at their disposal.

However, the expansion of the over-64 cohort of workers intersects in a particularly dramatic way with technology. Technological developments that are usually considered to affect younger consumers and workers the most will also enable older workers to stay in the labor force more easily. This intersection will reinforce both trends as both disruptors and older workers benefit from these workers’ uptake of the technology. Sometimes these disruptive technologies actually seem to be a better fit for older workers than for their younger peers.

  • The peer-to-peer economy is not just for millennials. Older workers who don’t want to exit the workforce entirely can take advantage of the same flexible options -- such as driving for Uber or Lyft, or offering hospitality through Airbnb -- that workers at the other end of the age spectrum are embracing for the convenience they offer.
  • Older workers can also take advantage of increasing opportunities for telepresencing to avoid the need to commute and to find flexible part-time work.
  • Many older workers, particularly in more technical occupations, will be able to use MOOCs and other free online learning tools to update their skills; since MOOCs often offer precise “nano-degree” certificates targeted at particular skills, they will be a good fit for older workers who need to hone and refine skills rather than build from scratch.

Independently of biotech treatments for diseases of age, other technologies will continue to expand the capacities of older workers as they age:

  • Mobility is profoundly important for older people, and the loss of a driver’s license is often a devastating event, signaling the loss of autonomy and sociability; self-driving cars will prevent this experience, and before then, access to ride-sharing services such as Uber and Lyft will boost mobility.
  • Augmented reality devices will provide contextual information for social and professional interactions, and ease the impact of minor forgetfulness
  • The internet of things (IoT) and the automated home will relieve the burden of managing many basic home tasks and processes.
  • The gig economy will offer cheap, granular assistance for tasks that can’t be automated, allowing older people to call for help with minor tasks on an as-needed basis.

Taken together, the rising manifestations of the automated, connected “smart economy” will work powerfully to enable older workers to stay productive and effective well into a “retirement” that may look more like their great-grandparents’ old age than their parents’ -- but will probably be made much more comfortable. This process will be seen across the world’s developed economies, all of which are facing deteriorating demographics. This is a sign that those demographics are not the economic death-knell that some pundits make them out to be.

Investment implications: In coming years, tech disruption will dovetail with an accelerating trend for workers to embrace a “semi-retirement” and remain productive in the economy for years past today’s typical retirement age. This trend will be a return to older historical patterns of aging and working, but it will be more comfortable because of better health and because disruptive tech tools will support the personal and professional lives of older workers. Aging demographics will not be the disaster that some pundits predict.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:



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