WASHINGTON -- As life expectancies continue to rise, investment advisors will need to fundamentally rethink the way they help clients plan for retirement and transferring wealth to the next generation, an expert on aging cautioned on Wednesday.

Laura Carstensen, a professor of psychology who directs the Stanford Center on Longevity, told an audience of advisors gathered here for Fidelity's Inside Track conference that as more people live into their 100s -- and as families in which four or even five generations overlap become commonplace -- some of the core elements of financial planning will have to change.

"Retirement itself will likely become an outdated concept. You know we've only had retirement for a short period in history, when you think about it," Carstensen said. "Very likely we're going to see a shift in that because individuals -- the majority of individuals -- can't earn enough working 40 years to be able to support themselves ... not working for another 30."

She noted that the relatively recent and dramatic uptick in life expectancy coincided with the transition from defined-benefit retirement plans to defined-contribution ones, placing more of the onus on retirement planning and saving on the individual, rather than their employer.


Advisors should be watching a U.S. "encore" trend that has seen growing numbers of workers who retire in good health embark on second careers, Carstensen said.

Often those are individuals who stepped down from high-paying positions to launch or join more socially conscious endeavors, Carstensen said, welcoming the trend as a boon for Americans' financial and mental health. "Working longer seems to improve cognitive functioning," she said. "There's growing evidence that work is good for cognition."

Just as the notion of retirement that has evolved over the past century might be due for a revision in an era when a majority of newborns are, by some estimates, projected to live past 100, the traditional approach to estate planning might be similarly outdated, Carstensen suggested.


"We do need to rethink how families share resources across generations," she said. "The old model of bequest at death probably [isn't] going to help as much intergenerationally.

"If you have to wait until you reach 80 before you inherit from your 100-year-old parents, that's a lot of life gone by," Carstensen added. "We need to think about new products, and ... new customs and norms about intergenerational support."

For advisors, that means helping clients develop " new models of saving and preparing," she told the audience of RIAs. "We need new products that will help people achieve a different-shaped life course, and you all are on the front lines of that."

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