He UK population is ageing. Data published by the ONS in
2015 show that the UK population of over 65s has grown by 47% in the last forty
years to make up nearly 18% of the total. And the number of people aged 75 and
over has increased by 89% in the same time period. The most common age at death
was 86 for men and 89 for women in 2011–2013.
Assuming retirement is taken at 65, the average retiree has
18 to 20 years ahead of them. During this time they may go from good health to
poor, or from complete independence to full time care. Exactly what will happen
over the next two decades is uncertain. However, their retirement is unlikely
to remain static and will be comprised of different phases, reflecting this
time of great change in their life.
A dynamic retirement model
Today’s typical retirement may be broken down into four
distinct stages:
Pre-retirement. Retirees
may ease themselves into retirement by working reduced hours at their current
job. Depending upon individual circumstances, they may cut back their hours in
their early to mid-60s. Retirement Insurance Company continues
to contribute towards their pension and pay for life cover.
Bucket-list years.
At about 68 years old, people leave their employment to do all the things that
were difficult when they were working. Travel is likely to rank highly amongst
their plans; 82% of over-60s cited travel as a goal in early retirement.* Their
lifestyle may be quite expensive and they’ll need a lump sum to fund
significant purchases.
Traditional
retirement. At about 73, the retiree starts to slow down and her lifestyle
starts to resemble the classic ‘pensioner’. This group is unlikely to work, but
will take part in leisure activities. Living expenses will be lower than in the
previous phase.
Care years. Later
on, from about 82 years onward, the likelihood of poor health and loss of
independence increases, and the retiree may need full or part-time care; in
2009, over two-thirds of people over 85 had a disability or longstanding
illness*. Living expenses will be modest, but care expenses could be high, with
uncertainty over how long remaining funds will have to last.
Retirement is no longer a single life event with a one-time
decision on how to use accumulated funds at 65 years old. Rather, it can be
viewed as a set of discrete retirements, with each phase demanding its own
level of income.
Meeting the needs of
today’s retiree
The freedom of choice now available to those at retirement
age has left many people with access to considerable capital – but they’re
unsure what to do with it.
At Sapiens, we believe that an open-minded view of a modern,
dynamic retirement presents an opportunity for providers to step up and deliver
much-needed support to retirees. Those providers who have developed a portfolio
of products to meet clients’ changing financial needs will have an advantage.
In addition, those who have a policy administration system that allows for
product flexibility and rapid new product generation will be in the best
position to meet the high expectations of today’s retiree.
Want to know more?
Sapiens International Corporation (NASDAQ and TASE: SPNS) is
a leading global provider of software solutions for the insurance industry.
Sapiens ALIS is our flagship solution designed to enable insurance providers to
quickly and efficiently address the challenges of a highly regulated and
increasingly competitive marketplace. Contact me for more information.
Source: http://blog.sapiens.com/ages-and-stages-retirements-shift-to-multi/
