Why Isn't Business Preparing More for the Future of Aging?
Insights from experts at a Milken Institute summit
It's no secret that Americans are living longer and working longer or that both trends are likely to continue. People over 65 made up 13 percent of the U.S. population in 2000; they're expected to be 20 percent by 2030. AARP estimates that Americans over 50 now spend $7.1 trillion annually and, as their numbers grow, that figure will more than double, to $15 trillion by 2020. So why aren't American businesses preparing better for the future of aging, to serve their employees and their customers? And what should they be doing?
Those were the overarching questions at the Milken Institute Center for the Future of Aging's Summit on Business and the Future of Aging I just attended in Los Angeles. Similar questions were raised (or should have been — more on that shortly) at the larger Global Conference of the center's parent, the Milken Institute, held simultaneously.
A Transformational Business Opportunity
In a booklet for his summit participants, the center's chairman Paul Irving wrote that the potential offered by human longevity is a "transformational business opportunity." And yet, he added "too few business leaders appreciate that population aging will fundamentally alter the landscape in which they operate."
That was abundantly clear at one Global Conference panel I attended, "Creating Meaningful Lives for the 21 Century Workforce: A Conversation With Top Executives." At no point during the hour-long session did the execs — who included CEOs from Campbell Soup, Wells Fargo, eBay and EY — talk about creating meaningful lives for boomer or Gen X workers. They're part of the 21 century workforce last I checked.
The Business and the Future of Aging summit panelists, however, were extremely concerned about this and about getting companies (and older Americans) to better address "the longevity dividend." Here, participants tried to answer a few key questions from Irving and from co-host Peter W. Mullin, founding chairman of Mullin Barens Sanford Financial. Irving's challenge: "How do we get the business community engaged and excited about the potential of our aging population?"
And Mullin asked: "How will we rewire, not retire? Reboot, not retread? Embrace wellderly, not elderly? And turn recreation into re-creation? Relish the opportunity of doing something we've always dreamed of, so we can wake up and feel good about the coming day?"
Think Differently About the Future of Aging
Summit participant Joseph Coughlin, director of the MIT AgeLab, believes corporate America and tech entrepreneurs need to think differently: "The new 'generation gap' is expectations. Compared to their parents, the next generation of older adults expects not simply to live longer, but to live better. This gap in innovations is the call to innovate and is the new business opportunity."
Even some of his students and Silicon Valley startups are missing that, however, Coughlin noted, saying: "I can't tell you how many pill reminder systems I have seen from students and start-ups. The story we need to fill in is about transportation, housing and fun."
A favorite new idea for older Americans that Coughlin recently saw: plans by singer-songwriter Jimmy Buffett, 70, to open a string of Margaritaville-themed retirement communities, which Next Avenue wrote about.
Remember the 8,000 Days
Coughlin offered one statistic that really stayed with me: 8,000 days. He said there are roughly 8,000 days between birth and college graduation; 8,000 days between college graduation and a midlife crisis; 8,000 days between a midlife crisis and retirement and, if you do retirement planning, another 8,000 days in retirement. That's an 8,000-day business opportunity.
Summit participant Andrew Scott, co-author of The 100-Year Life and an economics professor at the London Business School, said the questions for business about the aging of their consumers and workers are: Why should firms do anything and what should they do?
The "why" answer is easier regarding the consumers, Scott said. "With more old people, there's a lot of money at stake," he noted. But what to do for them is harder, he added. Conversely, said Scott, employers struggle over why they should do things for their older employees. "What" they could do is easier: "Revamp recruitment, change retirement policies and offer more flexible workforces," said Scott.
A few companies with what the Milken Institute Center for the Future of Aging calls "pioneering programs:" IBM, which built an Aging in Place environment in its Austin research lab to improve elder care; Michelin, which has rehired retirees to oversee projects and facilitate mentoring and Xerox, which has an ergonomic training program to reduce musculoskeletal disorders and related workers' comp claims in its aging workforce. And firms such as Cisco Systems, Target and UnitedHealth Group are "embracing reverse mentorships," where young employees mentor older ones, according to a recent New York Times piece.
Getting Venture Capitalists Intrigued
That said, Seth Sternberg, the young CEO and co-founder of Honor (a Silicon Valley start-up providing non-medical home health care) revealed how hard it is to get venture capitalists (VCs) interested in investing in the older adult market. "In 2014, .7 percent of venture dollars went to this market. Yet it's exploding, and already 5.5 percent of GDP [Gross Domestic Product]," Sternberg said. "The issue for VCs around the older adult market is they say: 'Why should we invest something for a market that doesn't adopt, or use, technology?'"
Yet Sternberg cleverly raised $65 million from them by debunking their stereotypes.
He asked the venture capitalists whether they could build a car and when they said they couldn't, Sternberg explained that cars are technology but don't feel like technology. Similarly, he said, the VCs should invest in his company because it was a human services company whose backbone was technology. And when VCs pooh-poohed older consumers as a market with an, ahem, limited term, he responded by asking them how many teenagers keep using the same product into their late 20s? The answer: almost none.
In order to persuade more venture capitalists to open their wallets for start-ups serving older Americans, Sternberg said, there need to be a couple of really big wins.
Fortunately, a few initiatives aim to make that happen. For instance, there's the Aging 2.0 global innovation network for aging and senior care. Aging 2.0 just launched a Grand Challenges initiative to "focus and prioritize innovation in the aging space and to make an impact at scale." AARP's annual Innovation @50Plus LivePitch event invites start-up founders to pitch their ideas to judges and intended users. It has raised more than $80 million in investments and four LivePitch companies have been acquired.
Thinking Differently About Older Workers
On the flip side, summit participant Patricia Milligan, who is senior partner and global leader for the Multinational Client Group of Mercer (the world's largest human resources consulting firm), said employers needed to start thinking differently about older workers. Milligan bemoaned American businesses' lack of a workforce strategy for older workers.
What's more, Milligan said, employers need to get over three major categories of unconscious biases about workers over 50 that are unacceptable to say publicly. They are:
- Older workers are less productive than younger workers
- Older workers cannot learn
- And older workers cost too much
Although older workers may not perform as well as younger ones on individual metrics, Milligan said, they are high performing in the ways they have an impact on their teams, on reducing turnover and on creating stability.
Summit participant Chip Conley, a former travel industry CEO hired at age 52 by Airbnb as a strategic advisor for hospitality and leadership, calls himself a "Modern Elder." He'd like to see businesses assemble affinity groups of their 50-plus employees as many have for their female, minority and LGBTQ workers.
There's also money to be made for financial services firms and for investors, Irving said, by tapping into the longevity dividend. "Why is there no major aging-focused mutual fund or ETF?" he asked. "The longevity economy may be the most exciting investment opportunity for decades to come." Hmmm… Perhaps it's time for an S&P 50-Plus Fund.
The Fountain With Youth
And summit participant Marc Freedman, founder and CEO of Encore.org — a nonprofit whose tagline is Second Acts for the Greater Good — reminded us all of the importance of doing work with purpose as we get older.
"On the one hand, mortality is a reality and we realize we won't live forever," said Freedman. "But on the other hand, we have the chance to do something significant with that time. It's kind of a sweet spot in life. JFK said: 'We've added years to life, now it's time to add life to those years.' We've added one month a year since then. How are we doing adding life to those years?"
Freedman's especially keen on having older Americans mentor and assist younger ones, especially at-risk youth. "It's not about the fountain of youth," he said. "It's about the fountain with youth." And it just might make you happier, too. Freedman says Harvard Medical School professor George Vaillant's research found that older people who engage with younger people are three times as likely to be happy as those who fail to do so.
"The goal isn't to be young, to hang on to our fading youth," said Freedman, "but to be there for those who actually are young."
Summit participant Joan Ruff, board chair of AARP, said she'd like to see more conversations about aging between parents in their 50s and 60s and their children — the business leaders of tomorrow and sometimes of today.
"The women's movement changed things because daughters talked to their fathers. To change minds about aging, we need the flipside: We need parents to talk to their sons and daughters, so they can understand, and can make changes."
Quite a bit to chew on for CEOs, business managers and the rest of us to address the future of aging.