Welcome to the Pretired

The Economist included an excellent special report last week about the economic impact of the biggest demographic trend facing the world. And it also made a radical proposal, one that I support.

The radical proposal was about finding a name for the group of people who are no longer in traditional paid work but are fit and active. They suggested calling this group the Pretired, which seems as good a name as any. The report makes the point that once a group has an established name, it is often given more consideration by policy makers and firms. They used the example of teenagers, a term that hardly existed before the fifties. Once the term became established the group somehow became a material focus for policy, for marketers, and even among its own members. The Economist claims that the revolution in popular music could partly be put down to the creation of the teenager moniker. Other examples could have been school kids, retirees or mixed race people. Then there are acronyms like DINKY (double income, no kids yet) or even groups of countries like the BRICs. I like the idea.

The pretired, if that is what we are to call us, are an exploding group. Just one generation ago, people in the developed world tended to slog on to 65 in their job, and then keel over just a few years after stopping. My Dad was not unusual in retiring at 65 and dying at 66, and I think there was a connection between the two events as well. He even squeezed two other heart attacks into the interim.

Now things have changed. Articles bemoaning how everything is worse than in the good old days tend to forget that healthy life expectancy has increased by more than 20 years within the last 50 years, and is still increasing. That is one heck of a bonus, or at least it offers that potential. The developing world is catching up as well, so that by 2050 there might be a billion or so pretirees in the world. God willing, that might just still include me.

The excellent special report demonstrated what could be achieved by focussing on an under-studied group. There were four basic sections – employment, consumers, finance and technology – and it had strong insights in each area. The overall tone is optimistic: much writing casts this demographic as a future drain on society, but the report suggests that with a smarter attitude they can be an engine for progress – as well as having a great quality of life ourselves.

In employment, the prevailing model is changing but not fast enough. Many people, like me, take retirement earlier nowadays, for a variety of reasons, but formal pension ages are slowly increasing, and the changes from defined benefit to defined contributions have left many people short of funds for their pretirements. Yet the gig economy is very well suited to pretirees – I even investigated becoming an Uber driver myself last year, until I learned that it would not be viable on low weekly hours because of NYC insurance requirements. Further, pretirees can make excellent small business owners and entrepreneurs as well as incubators, consultants and all that other modern jargon.

The report argues that the concept of the cliff from work to leisure should be abandoned. Firms should learn what older staff could do for them, especially in teams, and pensions should be modified to be more flexible towards different income patterns. In my view, another blocker is the idea that, within one firm, wages can only go up as tenure increases. If we pretirees accepted that our value might plateau and even gently decline (and if our pensions were not adversely affected) then firms and their staff could work together for longer.

I’ve never understood why companies have been so slow to see the pretired group as target consumers. We have all the money! And we have the time to spend it! Yet, judging by the ads we are exposed to, for example when watching golf, all we are interested in are financial products and health care solutions, and many of these are marketed to us as if we are ready to slow down. What rubbish!

Again, it starts to change, only too slowly. Leisurely cruises are being supplemented by holidays with a bit more adventure. True, we are not all that keen on sleeping on the floor or third class travel or sharing rooms, but we can often hike, or cycle, and do things that are not called bingo. We want to learn, and experience, and be entertained, but currently we have to scratch around to find suitable products for all those things. I have consciously looked for companies to invest in that have credible offerings for pretired people, and if I were starting a business I would surely target that group. It is the way to succeed.

The third chapter is about finance. The report makes a neat point that while many pretirees have too little money to spend, many others have too much, and are too cautious based on risks of living long and potential nursing home or medical costs. My mum spent most of her life saving up for such costs, and, like many, in the end the costs never really materialised. She died holding more assets than she had ever had, yet had deprived herself of many comforts.

The report calls for financial products to respond to this reality. Reverse mortgages are a great example, but they have not become mainstream yet, partly because no one is marketing them smartly and because of unnecessarily high costs. The other opportunity is for modified life insurance policies that may out not when we die but when we live too long or when we face huge costs. Smarter medical and care choices and options would also help – the UK Conservatives were on to something with the social care policy that they botched before the election.

Then there is technology, another topic where providers have had blinkers with their targeting. How long did it take before laptops had readable print or simple menus and instructions for those not born into the tech world? How is anyone over 50 supposed to be able to type reliably on the small screens of today’s smartphones? And why do Fitbit and those working on the internet of things focus on tiny youth markets when the benefits, and the profits, could be huge for pretirees? Providers will wake up to this eventually, and those of us new to pretirement are not as tech adverse as the previous generation, so expect many innovations in the next few years.

So, a common theme from the report is the blindness of providers to pretired opportunities. Employers, movie-makers, travel designers, financiers and technology providers are all locked in to other generations and other ages. Yet I repeat – there will be a billion of us, we have all the money and we have much of the time!

In so many ways we have been a blessed generation. Few of us have seen war. Many of us will live 30 years longer than our parents did, and with better health, including mental health. We were the last generation to enjoy secure work and generous pensions, and the first to enjoy the fruits of a shrinking world. Perhaps we will be the last not to be seriously discomforted by a changing climate. Judging by this report, things will only get better for us, since for sure many of these opportunities will come to pass. The blessed will become yet more blessed. But this is good news for everyone, because our abundance, while not equitable, can be an engine to help later generations as well.