Best of 2015: Cognitive Decline and Retirement

lots of candlesIn today’s aging society, plan sponsors have become accustomed to talking about and dealing with longevity as a risk. But what if there was a way to see aging populations as a monumental opportunity for building better societies and a more knowledgeable workforce?

This was the topic of the keynote session at the 2015 Investment Innovation Conference, which kicked off this morning in Palos Verde, California. Keynote speaker Laura L. Carstensen, Ph.D., director, Stanford Center on Longevity and professor of Psychology and the Fairleigh S. Dickinson Jr. professor in Public Policy discussed the history of human life spans. She outlined the key developments that have lead to longer lives in the developed world, including a better educated population, a food supply imbued with nutritional supplements, and ongoing pursuit of solutions to health problems that have lowered mortality rates among children and young people.

Said Carstensen, “For the first time, the vast majority of babies born in the developed work will have the opportunity to grow old.” And for the first time, families will have four, five or six generations alive at the same time. To put that in perspective, she said, “A 20-year old male today has a better chance of having a living grandmother today than a 20 year old had of having a living mother 100 years ago.”

Importantly, the global population is aging at a rapid rate – and if we don’t come to terms with this fact and make changes to how we view aging, the impacts will be severe. As she noted, the average age is rising by three months every year, a trend that is changing the fabric of our societies.

Work and cognitive ability

One significant upside of age is a general improvement in someone’s outlook on life said Carstensen who also noted that as people grow older, their perspective changes and they tend to be happier and more emotionally stable. This is likely because they tend to live in the moment, invest in sure things, seek deeper their relationships and to savor life.

Carstensen challenged the prevalent belief that age leads to cognitive decline by showing statistics that strip out illnesses like dementia and Alzheimer’s — illnesses that she says have unjustly skewed research and data on age and mental capacity. The results are startling, with very little decline in cognitive ability through age.

Such statistics should challenge our perception of the role of aging in our society.

Another finding she presented: the impact of work on cognitive function. Carstensen explained that working later leads to improved cognitive ability in later life. One powerful finding is the link between generous public retirement benefits and declining cognitive performance – Carstensen sees steeper declines in cognitive ability in old age in countries like France, Austria and Spain where public pensions encourage people to retire early.

By contrast, cognitive ability remains stronger in older age in countries where the working age is much higher — the United States for example.

Food for thought for policymakers as they tackle the retirement savings issue.

Employers should be ready to tap into the potential of an aging workforce and to move away from stereotypes of older people that tend to see them as feeble or unable to keep pace with others. Longer working lives will be good for society, she said – an older workforce means a better-educated workforce.

At the same time, employees and employers alike will need to rethink how realistic it is to expect to save for 20 or 30 years of not working – and to adjust benefits and work expectations accordingly.