The Retirement Reckoning: Are We Ready for the 100-Year Life?

Average global life expectancy has increased from 32 years in 1900 to more than 71 years today, with many developed nations now exceeding 80. By 2050, the number of people aged 60 and over is expected to reach 2.1 billion—more than triple the total in 2000 and over 20% of the global population.

This demographic shift is already straining financial systems. As populations age, many governments are experiencing higher entitlement costs and slower revenue growth. In the United States, federal analysts have projected that demographic shifts will make long-term debt servicing more difficult.

At the individual level, the risk of outliving retirement savings—known as longevity risk—is becoming more acute. With defined benefit pensions in decline and life expectancy increasing, households are bearing more financial responsibility for retirement. Pension funds and insurers are also under strain, particularly where low interest rates have reduced their ability to generate returns. The IMF has identified longevity risk as a growing challenge for the long-term sustainability of retirement systems.

Japan’s Ministry of Finance has supported deferred annuities to provide retirement income beyond age 85. In Europe, insurers have trialed pooled-risk contracts and longevity-linked bonds. Canadian fintechs are incorporating automatic savings increases and contribution nudges into workplace pension tools.

Pensions Under Pressure

Defined benefit pensions have sharply declined in the United States. As of 2023, only 15% of private-sector workers had access to a DB plan, while 67% had access to a defined contribution plan, such as a 401(k). Participation in DC plans remains uneven, with fewer than half of eligible workers actively contributing. In Europe, legacy DB schemes in countries like the UK and the Netherlands have largely closed to new entrants, accelerating a shift toward individualised DC systems.

Access to pensions remains limited in many regions. In low- and middle-income economies, fewer than 20% of workers are covered by any formal retirement scheme. Even in advanced markets, millions remain excluded. In the UK, part-time and low-income workers often fall below the earnings threshold required for automatic enrolment.

Pension adequacy is also a rising concern. The OECD Pensions Outlook 2024 notes that most systems fall short of replacement rate targets. Nearly half of working-age adults in the UK—around 45%—are not saving for retirement. The UK’s legal minimum pension contribution stands at 8%, split between employee and employer. Several reviews—including by the Pensions Commission—have raised concerns that this rate is too low to ensure adequate retirement income, particularly for younger or lower-paid workers. Since the introduction of automatic enrolment in 2012, participation has increased significantly: by 2023, 88% of eligible employees were enrolled in a workplace scheme. Total contributions reached £114.6 billion in 2021, but average savings levels remain modest—especially among part-time and low-wage earners.

Public pension models across Europe and Asia are also under review. ermany’s pay-as-you-go pension model relies on today’s workers funding today’s retirees. The country’s old-age support ratio has dropped from 4:1 in 2010 to roughly 2:1, and is projected to fall further in the coming decades. In response, the government has announced a €200 billion stabilization fund to help subsidise future pension liabilities without immediately raising the statutory retirement age.

In Japan, nearly 29% of the population is over age 65—the highest proportion among OECD countries. The government has raised pension eligibility ages and expanded tax incentives for individual retirement accounts in an effort to increase private savings and reduce long-term pressure on the public system.

Australia’s superannuation scheme mandates employer contributions but still struggles with coverage gaps among informal workers. In Brazil, reforms in 2019 curtailed early retirement incentives. South Africa continues to rely on a means-tested old-age grant as its primary support for older adults without formal coverage.

Retirement inequality remains most visible in gender outcomes.Women in the UK hold 48% less pension wealth than men at retirement age. The gap reflects longstanding labour market patterns, including lower average earnings and a higher concentration of women in part-time work. Many of these jobs do not meet the income threshold required for automatic enrolment into workplace pensions.

In response, the UK has reconvened its Pensions Commission, with new proposals expected by 2027. Across the European Union, governments are raising statutory retirement ages and adjusting benefit formulas, while expanding defined contribution coverage to ease pressure on public systems.

The global pension model—built for shorter careers and defined benefits—is being reshaped to reflect longer lives, more fragmented work, and the growing need for individual resilience.

Behavioral Barriers to Retirement Readiness

Many people struggle to save enough for retirement, not because they lack awareness or access, but because persistent behavioral biases shape their decisions.

Present bias—the tendency to prioritize immediate spending over long-term benefits—leads many to delay or underfund retirement savings. Saving requires forgoing something today in exchange for security decades from now, a tradeoff that often feels abstract. Research from the National Bureau of Economic Research suggests that addressing this bias could improve long-term savings by as much as 12%.

Status quo bias keeps savers stuck at low contribution levels. Most employer-sponsored plans still default to 3% of pay, and without an external prompt, few participants revise their rate—even if it’s insufficient for long-term needs.

Optimism bias leads people to assume they will earn more, work longer, or spend less than they actually do. One study from Wharton’s Pension Research Council highlights how exponential growth bias—the tendency to underestimate the power of compound interest—can lead to persistent under-saving, especially when paired with unrealistic assumptions about income or retirement age.

Loss aversion also shapes behavior. Many savers are more sensitive to short-term market dips than to the long-term erosion of purchasing power. As a result, they favor capital preservation strategies and avoid equities—even when long-term outcomes suggest a diversified portfolio would serve them better.

These behavioral patterns—deeply rooted, well-documented, and often unconscious—form the backdrop against which all retirement planning must operate. While financial products continue to evolve, their effectiveness ultimately depends on how well they account for the way people actually make decisions.

Rethinking Wealth Timelines and Financial Products

The old notion of retiring at 65 and spending a predictable two or three decades in drawdown is no longer realistic. People are living longer, working differently, and facing financial decisions that span into their 80s and 90s. The structure of retirement planning—and the products that support it—are being retooled to meet that reality.

Phased Retirement and the End of the Fixed Finish Line

Retirement no longer follows a fixed cutoff. Many older workers phase out of full-time employment gradually, continuing as part-time staff, consultants, or entrepreneurs. 67% of Gen X and 56% of millennials say they prefer a flexible retirement rather than a one-time exit. With 4.2 million Americans turning 65 each year through 2027, the notion of a fixed retirement date is becoming increasingly impractical—both individually and systemically. Financial planners are beginning to frame retirement age and life expectancy as variables, not assumptions—a recognition that the traditional life stages no longer apply cleanly.

Withdrawal Horizons Are Stretching

Auto-escalation strategies—originally designed to increase savings rates in workplace plans—are now being adapted for the decumulation phase. By gradually adjusting withdrawal amounts over time, these features help retirees align spending with real-life income needs and reduce the risk of early depletion.

The 4% rule once offered a simple answer to a complex question: how much can a retiree withdraw annually without running out of money? But that formula was built for a 30-year horizon. As Dunham & Associates notes, many retirees today face drawdown periods of 35 to 40 years. Planners are responding with dynamic withdrawal strategies that adjust for market shifts, income demands, and changing health status.

Income Products for Extended Lifespans

Deferred annuities and Qualified Longevity Annuity Contracts (QLACs) are gaining traction as back-end income strategies for retirees. SECURE Act 2.0 raised the QLAC purchase cap to $200,000, broadening access. Meanwhile, the market has shifted away from traditional fixed annuities toward indexed and deferred products that balance growth with downside protection. A recent study suggests that even a 10–15% allocation to deferred annuities can materially improve retirement income durability. Demand continues to rise: annuity sales hit a record $432 billion in 2024, reflecting a broader shift toward income guarantees later in life. Countries including Japan, Canada, and several EU members are testing pooled-risk products such as tontines and longevity bonds, which aim to distribute both investment and lifespan risk across groups rather than individuals.

Shifts in Planning, Platforms, and Advice

The advisory model is changing, too. Planners are increasingly modeling 40- to 50-year financial plans, integrating variables like healthcare costs, tax sequencing, and partial employment. According to EY, the global retirement savings gap is projected to exceed $400 trillion by 2050, a signal that longevity is not just reshaping personal plans, but entire financial systems. Reverse mortgages and equity release tools are gaining popularity among older homeowners seeking to unlock cash without having to liquidate their assets. Fintech platforms are also redesigning retirement infrastructure. In addition to automating withdrawals and rebalancing, many now embed behavioral nudges—reminders to review income projections, prompts to delay withdrawals, or alerts based on spending behavior. Robo-advisors are playing a key role in this shift, offering ongoing portfolio adjustments, personalized income advice, and tools that simulate spending scenarios over multi-decade timelines. These features, according to the World Economic Forum, represent a shift toward personalized income planning that can evolve in real-time as retiree needs change.

Defined-contribution platforms are introducing in-plan income solutions such as managed payout funds and hybrid target-date options, providing more flexibility for retirees who want income continuity without locking assets into traditional annuities.

Intergenerational Wealth – Transfer or Tension?

A historic transfer of wealth is underway. Over the next two decades, Baby Boomers and the Silent Generation will pass down approximately 84 trillion dollars in assets, with $72 trillion expected to go directly to heirs. Millennials are projected to receive the largest share, with Gen Z expected to inherit around $15 trillion globally. But this handoff is more complex than it appears. Differences in values, digital fluency, and financial experience are reshaping how wealth is managed—and by whom.

Financial Institutions Respond to a Generational Shift

Traditional wealth management models were built for older clients with long-standing advisor relationships. But 70% of heirs change or fire their financial advisor after inheriting, prompting firms to rethink client retention strategies. Institutions are developing intergenerational continuity plans, onboarding younger heirs earlier, and broadening offerings to meet their expectations for transparency, accessibility, and values alignment.

Digital-native clients are accelerating the shift. Mobile-first platforms, goal-based dashboards, and AI-assisted portfolio tools are now essential features. According to Javelin Strategy, younger clients expect real-time visibility and control—features legacy platforms weren’t designed to deliver. And with up to 40% of Gen Z and Millennial heirs reporting distrust in traditional advisors, technology alone isn’t enough. Engagement must be paired with shared values.

ESG Priorities and the Rise of Values-Based Investing

Younger generations are redefining portfolio objectives. Over 90% of Millennials express interest in ESG or impact-aligned portfolios, often prioritizing climate, diversity, or ethical governance alongside financial performance. Advisors are adapting by integrating ESG funds, impact metrics, and shareholder engagement strategies into wealth plans. Inheritance conversations increasingly focus not just on capital, but on legacy—what wealth enables and what it represents.

Digital Assets and Inheritance Innovation

The rise of digital assets adds further complexity. Cryptocurrencies, NFTs, and tokenized real estate are more likely to be held by younger clients, yet estate planning for these assets remains underdeveloped. Platforms like Trust & Will and Mezzi are working to close this gap with AI-powered digital vaults, secure key storage, and automated inheritance workflows. These tools help ensure that digital legacies—wallets, passwords, and asset logs—are preserved and accessible.

But infrastructure still lags behind ownership. Legal frameworks for digital inheritance vary widely, and families often struggle with access rights, security protocols, and tax implications. Advisory firms now face the challenge of incorporating digital estate plans into their broader intergenerational strategies.

Friction Between Generations

The wealth transfer is not frictionless. Bank of America research shows that many younger heirs prioritize liquidity, entrepreneurial ventures, and social impact, while older generations emphasize stability and long-term preservation. These differences often surface during discussions around asset allocation, spending priorities, and charitable intent.

Communication adds another layer. Mismatches in style—text versus email, dashboards versus paper reports—can create misunderstandings. In some families, inheritance becomes less a conversation and more a point of stress. SEI Insights notes that wealth advisors are increasingly stepping into mediator roles, helping families bridge generational divides with shared planning frameworks.

Longevity Finance as a New Discipline

The implications of longer lifespans extend far beyond healthcare or demographics—they demand a wholesale redesign of the financial system. As retirement stretches from a phase of life into an era of its own, savings behavior, product design, wealth transfer, and institutional priorities must evolve in parallel. The challenges explored in this report—from behavioral inertia to generational friction—are not edge cases. They are now the norm.

Banks, insurers, asset managers, and governments must collaborate to build frameworks suited to a 100-year financial life. This includes rethinking contribution structures, expanding post-retirement planning, aligning investment strategies with longevity risk, and ensuring that financial inclusion spans generations and platforms.

Longevity is no longer a niche topic in wealth management or policy—it is a foundational design challenge. From product architecture to regulation, what was once a demographic footnote must now become a primary driver of economic planning.