As populations age, it’s not only old dogs who will learn new tricks.
This article is from the August 2014 issue of INTHEBLACK.
In deepest Bavaria a very different production line is showing how the future may pan out for factory workers everywhere. Every employee is age 50 or above and, while that’s hardly ancient, their employer has put in place measures to make their work more effective.
Recently the powers-that-be at BMW worked out that within five years every worker on their production lines would be aged over 45 and it was likely this would slow production.
The carmaker went into overdrive implementing simple low-cost changes, such as workplace physiotherapists, Pilates classes, rest rooms and ergonomic chairs so workers could sit rather than stand. Productivity rates were raised and absentee numbers fell to the existing company average – at times it was even lower.
It’s no secret that populations in developed countries are getting older at an unprecedented scale. In Australia alone, 1.8 million people will be aged over 85 in 2050. One in four people will be aged over 65 by 2056.
While quintessential Baby Boomer rock star Mick Jagger sang “what a drag it is getting old”, it doesn’t have to be if society, governments and businesses everywhere respond in a timely manner.
“[Population ageing] is the demographic climate change of our time,” says Emily Millane, the sprightly 31-year-old principal research fellow at think tank Per Capita’s longevity and positive ageing project.
Still Kicking – its first report of three – looks at the many opportunities arising out of this demographic shift, from increasing our health and wellbeing as we age, strategies for lifelong education and training, and the world of work and retirement.
"People have to get off their backsides and want to get out and do something about it." – Everald Compton CPA
“The [Australian] Human Rights Commission released a report last year around age-based stereotypes and they found that 92 per cent of businesses and employees reported that the most likely place for age discrimination to happen was in the workplace,” says Millane.
“On the flip side, they commissioned some research by Deloitte that found an increase of 5 per cent of paid employment by people over the age of 55 would result in a A$44 billion impact on the economy every year.
"So there’s a real incentive to have older people in work.”
Former CPA Australia chief executive Alex Malley also sees major upsides.
“This is the new frontier, and given all the fear mongering about the problems of coping with an ageing population, we haven’t yet recognised the true battlefront of how we can make Australia’s demographic future work for both the national as well as the individual good,” he says.
The Australian Government is proposing to offer businesses a A$10,000 incentive if they employ a worker over the age of 50 who has been on government benefits for more than six months. But Per Capita’s Millane is a little sceptical about its efficacy.
“The government is thinking in the right way in terms of encouraging employers to keep older workers on, but I would like to see something a bit more strategic than one-off payments, which can be seen as a reward for having an ‘oldie’ on board,” she says.
Millane sees the need for a major cultural shift in attitudes to ageing.
“As this bulge of the Baby Boomers moves into old age there may come a tipping point where businesses realise that they are going to have to deal with this. As with all cultural shifts, it’s so systemic and it takes time, but I do think having big companies on board will help with the shift.”
Per Capita has partnered with the Panel for Positive Ageing, which lost its funding when the new Australian Government came to power in November. With National Seniors joining the fray, and crowd-funding, individual and corporate donations, the panel has been able to keep working and will release its Blueprint for an Ageing Australia in September.
“It’s about how we can turn ageing into an asset and this blueprint gets down to the mechanics of the policies that have to happen,” says Everald Compton CPA, the panel’s 82-year-old chair.
Compton is keeping the Blueprint’s final policy suggestions close to his chest but says there are very specific recommendations in health and wellbeing, work, retirement incomes, technology and business opportunities in an ageing market.
“We are going to email it to members of every Australian parliament, every mayor in the country, as well as all the ASX companies, major not-for-profits and healthcare companies,” he declares.
“We will also run a campaign to encourage people and businesses to do something about it.” Beyond government, “people have to get off their backsides and want to get out and do something about it,” Compton says.
A decade ago Singapore-based advertising marketer Kim Walker had an epiphany on his 50th birthday. When he did some soul-searching he realised the ad industry had effectively ignored mid-lifers.
“I thought here’s an opportunity: I can be the one-eyed man in the land of the blind,” he reflects.
Walker created the Silver Group, a consultancy focused on the over-50s market. Recent clients include a global hotel chain that’s looking to become more age-friendly and a caustic chemicals and explosives company with many machine operators who will soon be in their 60s. He has conceived age-audit tools for clients and is set to launch an age-friendly app on the iTunes store.
"That’s where most companies get it wrong: they think if it’s for old people they have to make it look like it’s for old people." – Kim Walker, Silver Group
Walker has also co-authored the book Marketing to the Ageing Consumer (Palgrave Macmillan) with UK-based age marketing specialist Dick Stroud. They argue that, just as with any other age segment, “you can’t apply broad brush statements”. But what unites all older people globally is changing physiology.
The pair has isolated 25 physical changes that influence how people behave as they get older.
“They are not only the things that companies need to understand to accommodate and adapt to those changes, but each presents massive business opportunities,” notes Walker.
There’s a fine line between appealing to an ageing market and blatantly selling products for old people.
“That’s where most companies get it wrong: they think if it’s for old people they have to make it look like it’s for old people. I’m going to be 60 next year and if anyone thinks of me as an older person I walk away,” comments Walker.
“Most of us will. We know how old we are, but we don’t want it rubbed in our faces.”
Is this why Baby Boomers, the “older young”, prefer hiking poles to walking sticks and Nikes to orthopedic shoes?
“Everyone knows they are not about to run the 100 metres,” quips Walker.
He observes that financial companies are leading the field in providing the right service and message, understanding that older customers prefer to deal with people their own age.
Marketing messages need to be uplifting, he believes, because Boomers across all cultures tend towards optimism.
Agile tech behemoth Apple is also ahead of the game, offering the best all-round “age-friendly” service, according to Walker. In its advertising, Apple tends to feature people in an intergenerational setting. Its website is clear of pesky flash and animation clutter. Products in stores are at waist height. There’s somewhere to sit, and staff on the shop floor and in after-sales service are helpful.
And let’s not forget Apple’s intuitive products.
“The iPad has been used in the last two US presidential elections in retirement homes to allow people, who have no experience of computers, to register a vote,” says Walker.
Boomers, Gen X and their juniors have grown up in a world where design matters to consumers. A standout in this area is US kitchen gadget company OXO. Started by 66-year-old Sam Farber, whose wife loved cooking but had arthritic hands, Oxo’s range of kitchen implements are loved by chefs and home cooks of all ages.
BMW's Dingolfing, Bavaria plant has been optimised for older
“Now I’ve spoken to people who say, ‘Oh I’ve got them in my kitchen. If I knew they were for older people I wouldn’t have bought them’,” reports Walker.
“Farber’s age-friendly gadgets understand the challenges of an older physiology but are beneficial to everyone. Today Oxo is a massive business globally and a beautiful example of how design will influence change.”
Attitudes to ageing
Have you heard the one about the man in China who took his 74-year-old mother on holiday by pushing her wheelchair for 93 days to a tropical tourist destination in the Yunnan Province?
This is not a joke. It was hailed in China as the best example of filial piety in years. On the flip side, there’s the 77-year-old who sued her daughter and son-in-law for neglect. A Chinese court ruled the couple had to visit her regularly and pay her compensation.
Respect for the elderly has been integral to Asian societies, particularly in cultures where the Confucian ethic of filial piety underpins much of family life. But this is changing, particularly in China, with the population shift from the countryside to the cities.
“The older folks have been left in the countryside, while the kids have moved to the cities and have got on with their lives free from the yoke of family,” says Kim Walker of the Silver Group.
Last year, the Chinese Government passed a law, the Protection of the Rights and Interests of Elderly People, requiring children to visit elderly parents once a year. Its nine clauses lay out the duties of children and their obligation to tend to the “spiritual needs” of ageing parents.
It’s been estimated that by 2030 China will have more people aged over 50 than the entire population of the US. Even now its cohort of over-60s make up 44 per cent of the population.
“China is going to get old before it gets rich,” notes Walker.
“Unfortunately there are a lot of older people in China who are desperately poor. Most grew up at the time of the Cultural Revolution and they have not accumulated wealth, whereas the 40-plus are the ones that have caught this latest economic wave.”
There are now incentives, via a government investment fund, to encourage foreign aged care groups to move into China to open retirement homes.
Efforts are underway throughout Asia to provide programs to care for the elderly and frail, and initiatives to encourage everyone to stay fit and healthy into old age.
This focus on the self might be key, particularly in more sophisticated markets. Walker’s research into retirement attitudes in the region shows that among older people in Taiwan and China, the focus is firmly on helping the next generation, while Singapore and Hong Kong are more akin to the West, where Walker says, “the attitude to retirement is, ‘This is my time.’”
Bodies of evidence
Medical research and pharmaceuticals are fields where ageing presents wide open opportunities.
Dr David Sinclair first rose to global recognition with his research on resveratrol, a compound that impedes the ageing process. In laboratories at the University of New South Wales and Harvard University, Sinclair’s research is leading to drugs that look set to combat the ageing process and could be widely available in 10 years.
“The principle behind it is that we can activate everybody’s natural defences against diseases,” Sinclair explains.
“Ten years ago we discovered seven genes in yeast cells that extended the life of the cells by about 30 per cent.” He says the drugs aren’t only for the elderly.
“I suspect they will be used in the young and middle-aged to treat diseases that they have, and prevent others from developing as people grow older.”
In the laboratories six-month-old mice (their equivalent human age is 30) have been benefiting from treatment.
“The mice can run twice as far on a treadmill and they are immune from the effects of obesity so they don’t suffer from the effects of heart disease or diabetes or even cancer until much, much later,” says Sinclair.
Accounting for aged care
Accountants can play a vital role in advising on the new complex web of aged care options introduced in Australia on July 1.
“It’s a complicated sector with a lot of noughts,” says Dr Henry Cutler, director of health economics at KPMG.
The average accommodation bond per individual is about A$250,000 and the first A$154,000 of the family home’s value is now included in the assets test for determining how much a resident pays for their care. The distinction between high care and low care has been eliminated and now all individuals can choose to pay for accommodation through a refundable accommodation deposit, daily accommodation payment, or a mix of both.
Although there will be increasing transparency, non-supported residents and their families will still face a complex choice when determining their accommodation payment type, given potential impacts on the pension, co-contribution to care, investment income and taxation, says Dr Cutler.
Assyat David, director of Aged Care Steps, a consultancy that advises the advisers on this sector, says: “Aged care has always been considered a health issue, not a financial one, and it’s actually both.”
The finance professionals’ target client is more likely to be the children of an aged person requiring care.
“With the over-85s, their biggest asset is their home and it’s really making decisions on whether to keep the home or sell it, and if you sell it, then a decision needs to be made as to how much to put towards repayment of care,” says David.
Decisions will impact on the aged pension and have implications on facility fees to be paid and any future income the individual may receive. There are also implications for estate planning.
Advisers should help clients to understand how different options stack up, says David. But it’s important for advisers to remember that they are generally dealing with families going through grief, which makes emotional intelligence a vital part of their skill set.
This article is from the August 2014 issue of INTHEBLACK.
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