Words Samuel Rueesch
July 6th 2023 / 5 min read
In literal terms, the "Holy Grail" of technology is to invent something that would grant us immortality—or at the very least, a longer life. From "The Epic of Gilgamesh," one of the world's oldest written stories, telling a hero's journey to uncover the secret of eternal life, to medieval alchemists who sought remedies and potions to unlock the elixir of life, humanity has always obsessed over the pursuit of immortality.
Great strides in ‘longevity’ have considerably improved chances that life expectancy could be meaningfully extended in coming decades. This isn’t new (over the past 20 years life expectancy has increased by more than 6 years in western countries).
But longevity isn’t just about living longer, it’s about living longer more healthily. Conversation has covered not just lifespan (through research for therapeutics that aim to delay the onset of atherosclerotic diseases, cancer, and neurodegenerative diseases), but also towards 'healthspan', understanding the things that will improve the quality of the years of our extended life such as preserving cognition and muscle mass.
But there are also a number of associated outcomes that come with extended life and healthspans. There are huge social implications for the world of work, retirement, family life, as well as services like housing, healthcare, and leisure. The wider economic implications on top of this are enormous.
In particular, we’re interested in understanding the financial implications of longevity. Financial institutions, resources, and infrastructure have thus far neglected to effectively reach older populations: and with a huge growth in this market segment (the over 85s being the fastest population segment globally), there is a huge opportunity with an enormous wave of demand ready to break.
If technology and medical advancements can continue to extend our life expectancy, are the current financial products in the market enough? Do they cater for the needs of an ageing population? Are there enough products that are being developed for this growing segment? The answer is probably no.
Until now, building products for the ageing population has often been seen as unattractive due to low tech adoption with that customer segment and very difficult distribution channels. Given that tech companies are broadly led by younger generations, it may be that they find it harder to empathise with the end user.
Existing solutions have focused largely around the spending management sector—helping older generations spend their pensions wisely. This exists a bit in the US, but scarcely in the UK. Even those existing solutions feel narrow and scope and fail to tap into wider opportunities.
We believe this segment has enormous potential. Tech adoption is growing exponentially, and the current focus on healthspan rather than lifespan will result in a thriving and physically active silver generation that is increasingly comfortable with adopting new products and technologies. Moreover, our partnership with Aviva, the UK’s largest insurer, positions us close to their expertise and wealth of experience regarding the needs of older and retirement age individuals.
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Many insurance products will be affected by a longer life-expectancy, particularly life insurance. The premiums that you pay if you buy a life insurance product are directly linked to your life expectancy. As this increases across populations, equations that determine prices will change.
This isn’t necessarily a bad thing for incumbents: most life insurers already incentivise you to live a healthier life as it delays any potential payout for them. But longevity research can also make pricing decisions more accurate.
The US life insurer FOXO is a prime example of it: they’re aiming to better understand pricing by running epigenetic (how your behaviours and environment can cause changes that affect the way your genes work) tests on their potential customers. The real benefits of using these tests in an actuarial setting is still contented, but what is even more interesting is how financial institutions could not only use genetic tests to more accurately price their products, but also to nudge their customers to live a healthier life, and moreover, build stronger links between longevity-focused healthcare through partnerships.
Life insurance is not the only protection product that could see changes in the coming years due to a longer life expectancy. Other products that might be worth reviewing are personal and professional liability, end-of-life care insurance, and obviously health insurance.
Our healthcare system is plagued with issues: the absence of price transparency, exorbitant private costs. Consequently, a fresh wave of startups are seeking to address these challenges by leveraging fintech as a viable solution. HealthKey, built in our Venture Studio, exemplifies this idea. Founders David and Tudor made their mission to make healthcare more personalised and accessible by connecting digital health startups with payors (e.g. insurers, employers) easing reimbursements and payment between the two parties.
Despite indications of strong demand, few startups are tackling the health needs of an older generation. HealthKey co-founder David confirms that feeling: “We’re seeing high demand for age-related health products. Increasing personalisation and diversity of products is a key lever in ensuring that we support the health needs of all age groups.”
From preventive interventions to the management of chronic health conditions that become more common as we age, and even the interactions with insurers and payers, the intersection between later-life health and fintech appears a very fertile ground for innovation.
Longer life means more spare time for pursuing personal passions. This is much more than filling the hours: leisure and travelling in particular go a long way to tackling loneliness, which remains a significant threat to older people’s health and wellbeing.
This will result in changing spending behaviours and habits in the later stages of our lives. From conservative financial habits to a greater inclination to spend on memorable experiences, Airbnb has seen a staggering growth in experience bookings on their platform from senior citizens. The senior demographic is spending more on travel than ever before. This is reflected in AirBnb’s effort to include older travellers in their marketing strategy (see their recent Bonnie & Clyde ad).
Improving access to travel was the impetus for Peter Mangan, founder of our studio business Freebird Club, who describes his business as “where the silver economy meets the sharing economy”. Their over 50s international travel club offers opportunities to travel and stay abroad with other similarly aged, like-minded individuals.
Seniors already hold the vast majority of housing wealth: according to Savills, the over 50s hold 78% of the UK's privately held housing wealth. Yet at the same time, an increasing proportion of seniors are downsizing and renting privately instead of staying in under-occupied houses. This leads to an increased need for financial flexibility making it easier to swap between wealth that is locked into housing equity to a more liquid form of assets. Tembo Money is doing exactly this, unlocking access to the housing market for first time buyers by transferring value of properties across generations.
Travelling only propels the desire to have a more flexible housing situation. We can imagine more seniors living a more nomadic lifestyle, not only due to the enjoyment factor, but also to avoid rising costs of living in their home country. Especially higher costs of care might lead senior citizens to resettle in a cheaper country abroad.
With the rising cost of living, a longer life expectancy, and new consumer behaviours of living models of housing are going to be needed. There is a huge opportunity for new assisted living models as well as innovative new forms of making senior housing more flexible and affordable.
To achieve financial longevity, managing wealth and income must be prioritised. More than 20% of the UK population in the ‘baby boomer’ generation show very low financial resilience with little or no private pension or housing wealth.
As people aged over 85 are the fastest growing segment of the population, this problem is going to grow exponentially. Our lifespan is growing at a faster pace than our income and wealth resulting in a population that will outlive its savings set aside for retirement.
Simultaneously, numerous retirees tend to underspend despite their financial capacity. In many wealthy countries, older adults are net savers—which poses other problems. This creates a dilemma where people underspend during their working years and oversave while retired.
Whilst public pensions schemes can’t solve this alone, the private sector appears to be lacking in innovative ideas. Guaranteed-income products like annuities, which could protect users from longevity risk, are extremely unpopular. They are often complicated and include exorbitant commissions and fees. Some people call them the most hated financial product. Although challenging, there must be space for innovation here.
Beyond just thinking about financial planning, the most viable solution to enable financial longevity is to just work longer in life. Indeed the time spent in retirement has become much longer in recent decades. In France between 1970 and 2020, the time spent in retirement for women almost doubled from 15 years to 30 years. This will require policy change, but could also become an interesting space for startups that will help this demographic to reskill and stay in the workforce for longer.
Consumer-focused fintech that offers innovative retirement products that provide steady income in later-life. The service leverages a long forgotten financial product called “tontines”. Modern tontines offer a way for users to pool investments together in a group and receive a “longevity-dividend” that grows over time. As participants pass away, their share is distributed among the surviving members. Modern tontines combined with new fintech infrastructure could become a serious challenger to traditional pension schemes and annuities.
A property management OS that enables institutional landlords, asset managers and Build-to-Rent developers to offer their housing units as distributed assisted living facilities. Care facilities for seniors haven’t seen any improvement or innovation in the past decades, and current offerings in the market don’t offer any aspirational solutions. Hence we believe that by combining the recent trend of seniors renting rather than living in their own home, and the increased quality of remote care, we can build a new category defining housing proposition.
A health insurance solution that harnesses early indicators of metabolic, hormonal, and gastric health to offer improved life insurance coverage. By detecting and addressing potential health issues at their earliest stages, the product empowers individuals to optimise their well-being, enhancing both their health span and lifespan while ensuring financial security for the future. Policyholders receive personalized recommendations, including dietary modifications, exercise routines, and targeted therapies, to optimise their metabolic, hormonal, and gastric health.
Protection products for senior travellers are often prohibitively expensive. Often individuals that are 70+ can pay up to nine times more than younger tourists for travel insurance. We believe that there is space for a new travel and insurance companion for seniors that can not only offer cheaper protection but can also offer frequent senior travellers peace of mind of having a service that can help them in case of health or safety emergencies.
Financial longevity and the opportunities created by the second-degree effects of a longer life-expectancy present a remarkable market opportunity of significant proportions. In our studio we are actively looking to invest and work together with founders in this space.If you have a keen interest in joining us to build innovative new ventures in the realm of financial longevity, we encourage you to get in touch with us.
We're actively looking to build businesses around financial longevity. If you're interested in building in this space, or would like to talk to us more, feel free to get in touch.
Sam Rueesch is a Venture Designer at Founders Factory, generating and validating concepts with our corporate partners to go through our Venture Studio. He has an MA in Service Design & Innovation from the Royal College of Art.
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