Elderly Poverty: What's That and What Can We Do About It?

The Korean TV series Squid Games made history last month, winning six Emmy awards. The survivalist drama is about a competition among 456 indebted participants pitted against one another for a cash prize of $40 million. Losers face instant death. In his acceptance speech, the leading man and best actor winner, Lee Jung-Jae, said that the show made "realistic problems we all face come to life." Obliquely, he was referring to the extreme steps people will take to alleviate poverty.

Even though the show's premise is fictional, the problem is real. More so for the older adults in the 65+ age group. It is particularly acute in South Korea, where 43.8% of adults over the age of 66 live below the poverty line. The corresponding numbers in the US and Australia are over 23%, as shown in the chart below. These numbers have haunted me ever since The Economist did the cover story on elderly poverty in 2020. The Nordics and some other large European countries like France and Germany have a better support system for older adults, and the numbers reflect that. Singapore and Japan are among the fastest-aging countries in the world, and the financial well-being of older adults is a challenge in these countries too.?

Has the problem become worse in recent decades?

Indeed, it has. People are living longer and healthier lives now than ever before. A child born in the West in the last decade has more than a 50% chance of living beyond age of 100, compared to just 1% a century ago. Unfortunately, policies mandating retirement age have not kept pace with this increased lifespan. In most countries, the retirement age is between 62 to 65 years. It means you have to potentially support a 40-year retired life with savings from a 40-year career. This explains the fear of financial insecurity among potential retirees and elderly poverty.

Amid other aging problems, such as inadequate pensions, the inability to find a job post-retirement, and the bias against hiring older adults, financial insecurity also exacerbates physical and mental health issues.

So, what can be done about it? What can I, as an individual, do about it?

1. Awareness and public policy: I can choose to raise awareness to influence public policy. Countries like Japan and Singapore have been forging ahead to address this issue. For example, Japan has introduced programs to keep older adults productively engaged, which has positively impacted their financial well-being and physical and mental health. The Singapore government has a few initiatives to address the issue, like the Silver Support Scheme. The Singapore Health District initiative, a multi-agency program, was also recently launched under the stewardship of Prof John Wong and aims to reinvent the way people live, work and play as they age.
2. Productive Longevity: I can choose to change the mindset with which people plan their post-retirement lives. The National University of Singapore offers a course for mid-career professionals called "Designing for a 100-Year Life." This course applies design thinking principles to planning a productive retired life. Among other tools and techniques, it advocates a "working-life continuum" approach that suggests that life will be a succession of jobs interspersed with periods of work and non-work (voluntary and involuntary) and lifelong learning. This is a distinct shift from the current "age-segregated" approach to life, which has sequential periods of education, work, and retirement.
3. Venture Investments: We can invest in companies using technology to promote financial inclusion and the financial well-being of older adults. We have done so through the Fintech Venture Capital Fund I work with. It is not an impact fund, but the best companies often tend to generate revenue and create a positive social impact.

So why am I posting this article and how can you help?

I was first introduced to the topic of financial inclusion by Prof David Lee in Singapore in 2014. I have been working on financial inclusion and financial well-being since then as my personal passion. In 2016, I was a Fulbright Fellow and Visiting Scholar at Stanford University, where my research was focused on the use of technology to support financial inclusion. We published a report in partnership with the IFC (part of the World Bank) and Stanford University on "Financial Inclusion in the Digital Age." I continued some of this work while I was a Distinguished Careers Institute (DCI) Fellow at Stanford in 2017 and 2018, under the guidance of amazing Prof Phil Pizzo. I also collaborated with Prof Ken Singleton to introduce a course on Fintech and Financial Inclusion for MBA students at Stanford and it is one of the more popular courses there now.

I have now been selected for the Bellagio Residency by the Rockefeller Foundation. I will be spending five weeks at the Bellagio Center in Lake Como, Italy, (yes, it is supposed to be very beautiful!) in October and November. My research this time is focused on the "Use of Technology to Support Financial Well-Being of Older Adults and Planning for Our (100-Year) Future," and I hope to publish a report early next year.

If any of you are working to address the problem of elderly poverty or the financial well-being of older adults, please get in touch with me. I would love to hear from you and see how we can collaborate.

P.S. All views and opinions are my own and not of the organizations I work with.?