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How will mortgages adapt to the ageless workforce of 2030?

Posted Friday 23rd of February 2018
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The financial crash of the noughties will go down in history as the Great Depression of our generation.

But unlike last century, where those who oversaw the run up to the crash were swiftly cast aside in favour of youth and new ways of working, the older generation today isn’t content with a carriage clock and a glass of sherry at 55 or 60 as they are waved off into retirement.

Instead we are witnessing a rebirth of the grey haired man and woman, people with life and sector experience who are increasingly choosing to work longer.

The result is intergenerational collaboration of the like we haven’t seen before and an increasing acknowledgement that their wisdom in the workplace should make sure we don’t get into the same mess again.

For me that can only be a good thing. After all I’m 53 and what hair I have left is grey! But it does present a challenge for the mortgage industry.

In its report, ‘The Future Workplace’, Unum worked alongside The Future Laboratory to identify macro changes in the workplace over the coming decades to forcast the workplace in 2030.

One of the fundamental changes it predicts is a move towards the Ageless Workplace or the ‘rise of a workplace that is ageless, enables returnment instead of retirement, and promotes the idea you can work forever.’

Underpinning its predictions is the changing demography in Western societies. In the UK the birth rate is falling, Baby Boomers, who make up a quarter of the population, are reaching retirement and living longer than previous generations of pensioners.

Life expectancy at age 65 has increased markedly.  We now expect those hitting 65 in 2040 to live another 24 years on average, almost double what it was in 1981. And by 2039 the number of over 65’s is set to rise by almost a half to 18m.

More pensioners, living longer, with fewer taxpayers funding public services and with reducing private sector pension tax breaks, isn’t sustainable – so something has to change.

And keeping people well, in the workforce and paying taxes for longer is the obvious answer.

We’ve all heard stories about someone who worked hard all their lives, saved, and planned for their retirement and tragically dropped dead six months after leaving their career.

Staying in work longer promotes mental and physical agility as well as providing purpose and easing the financial pressure of the transition from full-time employment to part-time employment and eventually retirement.

It could also help us avoid another financial crash by utilising the experience on offer from the grey generation – experience that is worth sharing.

According to the Office for National Statistics there are 1.7m entrepreneurs over the age of 50 in the UK, which means one in five people of this age group is self-employed.

And they have more success than their younger counterparts, 70 per cent of older entrepreneurs run a start-up that lasts five years or more compared to just 28 per cent for younger entrepreneurs.

To harness this experience and agility Unum recommends positioning older employers as ‘wellsprings’ of imagination, wisdom and entrepreneurialism rather than people who remember the past.

It also says we are ‘quickly moving into economic waters that require mental tenure to provide solid and experienced context and meaning to tomorrow’s business challenges’.

And it warns that failing to harness the experience of the older generation will lead to businesses wasting a lot of time and money ‘reinventing the wrong wheel’.

For those employers that move towards supporting an Ageless Workforce it promises ‘older workers will shortcut thinking for the workforce, and even become the champions of a more agile start-up mindset to tackle the turbulent times ahead’.

What does this mean for mortgages in 2030?

The industry will need to adapt and innovate to support flexible working patterns, partial retirement, returnment, payment holidays and any number of other initiatives that we haven’t thought of yet.

We could see bundled mortgages with different pre-approved elements that allow borrowers to draw down on a second charge, or equity release to fund the trip of a lifetime or home improvements, which run alongside a standard repayment mortgage.

Or mortgages may have built in pre-approved payment holidays for anticipated periods of illness with payments recommencing when the borrower is able to return to work.

What we can be sure of is that mortgages won’t look the same in 2030 as they do now.

And if the experience of the grey generation is harnessed effectively they won’t look the same as they did in the early noughties either – which can only be a good thing.

By Peter Beaumont, deputy chief executive of The Mortgage Lender

By Gillian McAllister , of The Mortgage Lender

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