The opportunity of increased longevity on our industry

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As a financial marketeer with over 25 years’ experience, I’ve noticed many changes in our market over the years, but the challenge of selling long-term savings products persists. 

In the past couple of decades, we have witnessed significant economic and demographic changes and the most significant is yet to unfold. With more people turning 50 than turning 5, we are on the cusp of a demographic tidal wave. Over the last decade, Ireland’s 50+ population has surged by more than a third (33.7%), adding almost half a million to this age group. *    

In addition to this, people in Ireland are living longer than ever before. Today, life expectancy at birth stands at around 82.6 years, placing us in the top levels across Europe. Healthy life expectancy stands at 65 stands at 11.6 years, well above the EU average (9.1). ** 

In a nutshell, we have more people in the market on the cusp of retirement and these people are expected to spend more time in retirement than previous generations. And here’s the kicker – these retirees will be the first generation to retire without the certainty of DB schemes. I can hear the cogs of your thought process spinning into gear. Let me break this opportunity down.

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1. A growing market 

Ireland currently has one of the youngest populations in the EU, but the balance is shifting rapidly as more people continue to turn 50 than 5. According to CSO population estimates, the number of people aged 65 and over is projected to exceed 1 million by 2050. This significant shift is inevitably placing mounting pressure on the public pension system. Funded primarily through current workers' contributions, it faces a shrinking support base as the old-age dependency ratio (the number of people aged 65 and over relative to those aged 15-64) is projected to rise from 20% in 2016 to 36% by 2051.*  This means we will have fewer workers supporting more retirees, rendering the current system unsustainable without intervention either through increasing contributions, reducing benefits, or a combination of both. The planned introduction of auto-enrolment is a welcome intervention, designed to increase private pension coverage, and get more people saving for their retirement in order to ease future reliance on the state system. According to Standard Life research, awareness of the value of a pension is growing, with 61% recognising it being fundamental to the retirement they plan on living. And yet, 41% don’t have a plan in place.*** As Ireland approaches a demographic tipping point, we’re also entering a retirement market tipping point: pensions and planning are moving into the mainstream, but the true opportunity lies in shaping this shift towards meaningful retirement readiness. That requires more than default or transactional support. At Standard Life, we advocate a human-centred planning philosophy, and our research highlights three core readiness indicators: being financially, socially, and mindset ready.  

  

2. Increased life expectancy 

Rising life expectancy means many people will spend far longer in retirement than previous generations, creating both new challenges and opportunities for our market. Longer retirements bring challenging financial considerations to the fore.  

One of the most direct implications of increased longevity is the extended period over which pensions must be paid.  

To address the financial sustainability of pension systems, many countries, including Ireland, have begun to raise the state pension age. The current state pension age in Ireland is 66, with plans to increase it to 68 by 2028. These changes reflect an acknowledgment of increased life expectancy and the need to balance the duration of working life with retirement years. 

Our research also highlights the vital elements of retirement planning that are often overlooked; feeling socially and mindset ready for this new phase of life that we, at Standard Life, promote as your second life. Without prior consideration, retirement can reflect a significant erosion of our social connections and unsettling disruption to our sense of self. Who am I without my work? Does working give me a sense of purpose? What will my weeks look like? Will I be mostly alone or engaging with people?  

Combining decades of research into the voice of the retiree, with practical insight from our experience supporting advisers and clients, we believe that broadening the retirement conversation beyond product names is essential to building a more retirement-ready Ireland.  

 

3. The value of advice 

Longer lifespans mean retirement is now truly a journey rather than a moment in time to plan for. It requires regular recalibration, with advisers acting as trusted partners to help clients manage their money, mindset, and feel confident they can sustain their wellbeing. Additionally, the systems in place to support retirement savers are changing.  

The value of regular advice is evident in Standard Life’s Bringing retirement into focus report. Regular advice improves pension confidence, financial and emotional resilience, and boosts readiness across all three indicators (financial, social, and mindset).  

• Less than a third (29%) of adults feel financially ready for retirement but that rises to 45% for those who get regular financial advice.  
• Just 34% of adults believe they will be able to live comfortably off their pension, but that rises to 50% for those who get regular advice. *** 

 

In this evolving landscape, the role of financial advisers is more critical than ever. Standard Life’s research consistently demonstrates that advisers who can help people visualise and regularly plan for the type of lifestyle they want to live will help their clients achieve better outcomes.

 

How do we prepare people to manage their income in a longer retirement?

The confluence of living longer and the rising cost of living is leading to greater pension pot uncertainty. Soon to be retirees have less confidence their pension will sustain them and are seeking greater certainty for their retirement income. The goal at pension drawdown should be to turn savings into security. We need to give people the confidence to enjoy the money they have worked hard to save alongside the reassurance they can meet every-day spending. 

A guaranteed income, like an annuity, can be a powerful foundation to cement this need for certainty. It’s not just a product, it’s peace of mind, and a guarantee of a certain standard of living for a well-deserved retirement. It ensures essential income needs are met, no matter what. With that safety net in place, the remaining funds invested in an ARF or vested PRSA can be drawn down to cover the more exciting opportunities in your clients’ second lives.

Conclusion

Increased longevity is a double-edged sword for our industry. While it signifies better health and quality of life, it also poses significant challenges for pension sustainability and adequacy. The CSO reports provide clear evidence of this demographic trend, and the industry must adapt through policy changes, innovative solutions, and robust retirement planning strategies. 

Our role is to guide clients through these complexities, helping them to secure a life full of possibilities.  

With proactive planning, informed decision-making, and the right professional guidance, it is possible to navigate these challenges successfully, setting your clients up for a life that gets better with age. As we continue to adapt to the realities of increased longevity, the focus must remain on ensuring that our clients can enjoy their retirement years with confidence and peace of mind. 

 

References

* Central Statistics Office (CSO), Ireland: Various reports on population and life expectancy statistics.
** Health in Ireland: Key Trends 2024, Department of Health.
*** Bringing retirement into focus 2024, Standard Life