Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 66

Making judgments based on age

Complexity is one of the challenges of our information society, and we typically respond by making simplifying assumptions. This helps us manage the complexity but increases the risk of focusing on the wrong things. Worse, our prejudices easily lead us to simple answers which are consistent with our views but are often biased and misleading.

The complexity of longevity

Increasing longevity is one of the most challenging and complex issues we face – as a community and as individuals. It’s easy to fall into the trap of making sweeping statements. Prejudice, often fuelled by personal fear of our own mortality or that of our parents, can lead to big errors of judgment.

Why, for example, is there a disproportionate number of professional ice hockey players in Canada born in the first months of the calendar year? Readers of Malcolm Gladwell’s Outliers know that the selection of young players for higher-level ice hockey coaching starts in year seven or eight. Children born early in a calendar year are more mature than their age peers born late in the same year. So they tend to be chosen for further coaching. Same ‘age’ but different capabilities.

We become increasingly individual and different as we mature. Our community largely avoids using age as a basis for judgment until around age 60 when quite suddenly ‘age’ again becomes an issue. It’s used as a decision point if we want to ‘retire’ or access our super or get a free transport pass. In its report ‘Access All Ages – Older Workers and Commonwealth Laws’ (March 2013) the Australian Law Reform Commission identified a plethora of areas in which age has become more obviously a basis for discrimination than it might have been at the time the original legislation appeared.

‘The end of the Age of Entitlement’ has now entered our vocabulary as a justification for a series of age-based changes to government support (along with many other changes).

Has the notion of a numerical age outlived its usefulness? We are already evolving more sophisticated ways of evaluating ourselves. Could we be heading for a new ‘Age of Enlightenment’ where we create more contemporary models to help us know and manage ourselves better with increasing longevity? If so, this should lead to more effective allocation of expensive resources. Benefits would accrue to both individuals and governments.

Personal capital or value

At My Longevity, we developed a simple model which a person can use to help with their ‘retirement’ decisions. It shows how our personal value (capital) can be seen as a simple combination of our capability and experience. These accrue and eventually decline at different rates over our working life. The model invites people to consider the impact of retiring on their personal value. Each of us is different so the individual model varies accordingly. It can help shift the retirement focus to one of personal value rather than just financial value, and introduces the notion of a personal time frame to underpin decisions. It also fosters the important notion of mastery over personal circumstances which in turn supports the quest for independence.

DW Chart1 130614 crop

DW Chart1 130614 crop

Source: My Longevity Pty Ltd

This illustration shows how personal capital can accrue over time with a potential bonus from deferral of retirement. Personal circumstances can vary a lot from this model. Although our capability might decline in later years, it can be compensated for by our experience.

There are many other ways of showing people the diversity of options that can open up with greater longevity awareness.

Older people are increasingly seeking information and services which help them manage their lives better. Many of them want to continue to contribute to society and do so.

When governments discriminate in delivering services using outdated metrics like age, they risk giving the message that they are behind the times and out of touch with reality. They attract criticism and waste opportunities to encourage informed independence.

Success in managing longevity requires an effective partnership between individuals and governments. Maximising personal capability requires an environment that is supportive and nurturing.

As Malcolm Gladwell suggests: “It’s true in sports and it’s true in the rest of our lives as well. We need to wake up to the fact that as a society we haven’t been doing our part.”

 

David Williams began longevity research in 1986 and was a Director with RetireInvest and CEO of Bridges. He chaired the Standards Australia Committee on Personal Financial Planning. David founded My Longevity Pty Limited in 2008.

RELATED ARTICLES

The future of retirement is already here

Stop worrying about how much you matter

Retirement is not for bludgers

banner

Most viewed in recent weeks

A tonic for turbulent times: my nine tips for investing

Investing is often portrayed as unapproachably complex. Can it be distilled into nine tips? An economist with 35 years of experience through numerous market cycles and events has given it a shot.

Rival standard for savings and incomes in retirement

A new standard argues the majority of Australians will never achieve the ASFA 'comfortable' level of retirement savings and it amounts to 'fearmongering' by vested interests. If comfortable is aspirational, so be it.

Dalio v Marks is common sense v uncommon sense

Billionaire fund manager standoff: Ray Dalio thinks investing is common sense and markets are simple, while Howard Marks says complex and convoluted 'second-level' thinking is needed for superior returns.

Welcome to Firstlinks Edition 467

Fund manager reports for last financial year are drifting into client mailboxes, and many of the results are disappointing. With some funds giving back their 2021 gains, why did they not reduce their exposure to hot stocks when faced with rising inflation and rates?

  • 21 July 2022

Welcome to Firstlinks Edition 466 with weekend update

Heard the word, cakeism? As in, 'having your cake and eating it too'. The Reserve Bank wants to simultaneously fight inflation by taking away spending power, while not driving the economy into a recession. If you want to help, stop buying stuff.

  • 14 July 2022

Welcome to Firstlinks Edition 465 with weekend update

Many thanks for the thousands of revealing comments in our survey on retirement experiences. We discuss the full results. And with the ASX200 down 10%, the US S&P500 off 20% and bond prices tanking, each investor faces the new financial year deciding whether to sit, sell or invest more.

  • 7 July 2022

Latest Updates

Economy

The paradox of investment cycles

Now we're captivated by inflation and higher rates but only a year ago, investors were certain of the supremacy of US companies, the benign nature of inflation and the remoteness of tighter monetary policy.

Shares

Reporting Season will show cost control and pricing power

Companies have been slow to update guidance and we have yet to see the impact of inflation expectations in earnings and outlooks. Companies need to insulate costs from inflation while enjoying an uptick in revenue.

Shares

The early signals for August company earnings

Weaker share prices may have already discounted some bad news, but cost inflation is creating wide divergences inside and across sectors. Early results show some companies are strong enough to resist sector falls.

Property

The compelling 20-year flight of SYD into private hands

In 2002, the share price of the company that became Sydney Airport (SYD) hit 80 cents from the $2 IPO price. After 20 years of astute investment driving revenue increases, it sold to private hands for $8.75 in 2022.

Investment strategies

Ethical investing responding to some short-term challenges

There are significant differences in the sector weightings of an ethical fund versus an index, and while this has caused some short-term headwinds recently, the tailwinds are expected to blow over the long term.

Investment strategies

If you are new to investing, avoid these 10 common mistakes

Many new investors make common mistakes while learning about markets. Losses are inevitable. Newbies should read more and develop a long-term focus while avoiding big mistakes and not aiming to be brilliant.

Investment strategies

RMBS today: rising rate-linked income with capital preservation

Lenders use Residential Mortgage-Backed Securities to finance mortgages and RMBS are available to retail investors through fund structures. They come with many layers of protection beyond movements in house prices. 

Sponsors

Alliances

© 2022 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.