Shifting stages of the life cycle: What it means for the property and retirement industry

Life expectancy in Australia averaged just 69 years right up to the middle of the 20th century.

There was a time when time stood still, or at least when the stages of the life cycle remained fixed. There was childhood then adulthood then old age and then death. And all this was neatly wrapped up within a three-score-and-ten (ie 70-year) time frame. Indeed, life expectancy in Australia averaged just 69 years right up to the middle of the 20th century.

What a practical arrangement for Australian treasurers of the time.

(Male) workers worked 50 years from the age of 15 (or from the age of 14 more likely), paying taxes along the way, and then they got barely four years in retirement funding before expiring, permanently.

Bernard Salt

In fact life expectancy for those making it through to 65 was (a bit) longer than four years, but you get the idea: lots of tax paid across a working life, but not a lot of tax repaid by way of an age pension.

No need for a city like the Gold Coast in 1950; no one lived in retirement long enough to make the relocation from Melbourne or Sydney, or even Brisbane, worth the effort.

The Gold Coast and its copycat ­retirement-lifestyle communities throughout Australia only exist today because life expectancy has pushed into the mid-70s and, from this century especially, into the mid-80s as well.

Do you think it is practical for the working life to end at age 65 if life ­expectancy is likely to push out to the mid-90s at some point in the 21st century?

I think we are right now prepping for this eventuality by reimagining how retirement might work later in the 2020s. Work no longer ends at 65 but rather it tapers off; it whimpers into the late-60s and early-70s; indeed some brave souls – often farmers and entrepreneurs – soldier on in the workforce well into their 80s.

For some reason beef cattle farmers are especially disinclined to the concept of retiring (as evidenced by the census) thereby giving the impression that they would be quite happy to expire (permanently) on the farm and therefore in their place of work.

Today, life expectancy (at birth) for the average Australian is 84: a bit more for girls, a bit less for boys. (Men have yet to close the life expectancy age gap.)

That’s 19 years in retirement (from the age of 65), although by my observation many (but not all) Australians start to wind down on the work front from their late 50s, say from the age of 58 onwards. (Do some workers still get access to a defined pension scheme from age 55?)

That’s more than enough time in retirement to sell the rambling family home in Sydney or Melbourne and to downsize to an apartment in the inner city (near the arts precinct) or to a sea-change or tree-change location. And indeed to hopefully top-up the “super pot” along the way with (some of) the difference.

I am surprised there is no (prominent) business that offers baby boomers a one-stop shop transitioning them out of an admittedly well-to-do suburban property into a lifestyle apartment or townhouse and offering a guaranteed dollar-value-difference contribution to their super. After all, not everyone has the skills, the inclination, or the time to make such a complex transition in their later-life living arrangements.

The point is that changing life expectancy is gifting additional years, if not decades, to Australians (and others) and we don’t seem to be entirely comfortable with how to manage all that extra time.

Previous generations had no plan for life beyond retirement whereas baby boomers are rewriting the rules.

Do we stick around in the family home waiting for grandkids to occasionally visit? Or do we sell down, buy up, and reorganise the way life is lived when work is no longer a consideration in everyday life?

And if 60-somethings and 70-somethings need inspiration in how a stage in the life cycle might be boldly – outrageously, even – reimagined then look no further than today’s millennials now aged 24-42 who quietly but wilfully revolutionised the 20s and the low-30s during the early-2000s. They created or maybe finessed the whole inner-city hipster lifestyle milieu.

The point is that previous generations had no plan for retirement other than hanging on for dear life to every year of life beyond the age of 65. It is up to the baby boomers to reimagine how these years – these 25 or 30 years – beyond the standard working life, might be lived, loved and savoured.

And if this is the case, then the property arrangements from 55 onwards would involve a process that starts with downsizing out of the family home and into a nearby townhouse (or warehouse for the groovy).

This modest geographic move enables later-life house-movers to retain long-term connections to a locale so that connections are not lost with friends, family and all that is familiar.

By the late 60s there might be an acceptance that work is no longer a viable weekly let alone an acceptable daily commitment.

It’s time to sell up and to move to a sea-change or a tree-change location within striking distance – within grandchild-birthday-party distance – of a capital city. Here is a property that is single level that offers a garden that offers access to amenity like a beach, or a bushwalking trail. Here is a property that offers access to shops and to medical services.

By the late-70s another change is imminent. Health fades and especially in men. The reality is that many baby boomer men will predecease their female partners and especially as the cohort born in the late-1940s pushes into their late-70s (in the late-2020s).

All of a sudden, the lifestyle townhouse in a tree-change community no longer meets the needs of the critically ill; a new solution must be found, quickly.

For some, this may mean relocation back to the city, to a townhouse or to an apartment within call-in distance of a son or daughter. Some might even look closely at the idea of a granny flat. (This segment really does need a name change.) Some boomers later in this decade may look at ways of pooling generational wealth with their kids in order to build bespoke properties that allow parents to be together-with but apart-from their next-gen families.

Downizing to an apartment has become the go-to plan for people approaching retirement.

And then of course progressively throughout the 2030s baby boomers will enter the frail-elderly stage of the life cycle (say, from age 85 onwards) where assisted living arrangements are often required.

Again this kind of accommodation must be positioned strategically throughout the metropolitan area so that 50-something sons and daughters (and often daughters-in-law) as well as various family-minded grandchildren, can “swing by” and engage with an elderly loved one.

When managing care at home becomes “too much” the next best thing is to have that care offered not so much near home but within the orbit of home’s comings and goings.

And then of course beyond the great abyss, beyond the inevitable dying-off of the baby boomer generation progressively, thoroughly, throughout the 2030s, there comes like a comet a great property-­enabling reverberation that is known as the “great wealth transfer”.

Eighty-something boomers passing on property (and other) wealth to their mostly 50-something kids in the 2030s will underpin next-gen demand for lifestyle property as will be reimagined by millennials at the time. Some boomer wealth will surely filter through to grandchildren then in their 20s and 30s struggling to buy their first home.

The various stages of the life cycle are a work in progress that have been tweaked, twisted and finetuned every decade for at least a generation. The old days of childhood, adulthood, old age and death are long gone. There are better ways to live and better, fairer and more inspiring ways to exit this life.

It is now our turn to imagine how life’s later years might be put to good use. And by “our” I mean all Australians who want the best for their parents, grandparents and grandkids. A large part of this story involves simply doing what’s right, what’s fair, what’s reasonable for each generation at each stage of the life cycle.

But it also means delivering the right property and the right services to enable all Australians to live and age with dignity and in peace without prejudicing the prospects of generations to come.

Bernard Salt is founder of The Demographics Group