Jersey Boys and Working at 80

If you are looking for a few hours of musical fun and a good rags to riches story, I recommend Jersey Boys. I had the pleasure of seeing the stage production in Las Vegas last year. I liked it so much that I am seeing the Broadway show later this summer. The movie is equally fine although a theatrical aficionado may find the drama with music less exciting than music with a bit of drama. Besides the entertainment factor (and I give the film a thumbs up), the original endeavor and global touring companies continue to spin foot-thumping sounds into commercial gold. According to "'Jersey Boys' has been a windfall for all involved" by L.A. Times writer David Ng (June 21, 2014), worldwide grosses exceeded $1.7 billion in March with more than "20 million people in 10 countries," counting themselves as lucky audience members.

What you may find notable is that some of the talented contributors passed twenty-one a long time ago and yet demonstrate that one can keep working, if desired, for many years. Clint Eastwood was both a producer and director of the movie. He is eighty-four years old. Frankie Valli was an executive producer of the movie, helped to develop the stage deliverable and is still singing live at the age of eighty. Christopher Walken does a marvelous job as a celluloid version of Valli mentor, Gyp DeCarlo. He is seventy-one years old. Bob Gaudio, the magical hit-maker for the Four Seasons and member of the Songwriters Hall of Fame, has been front and center in the making of the play and movie. He is seventy-two years old.

These individuals are not alone in continuing their presence in the work force. Forbes staffer Halah Touryalai cited a Wells Fargo study that 30% of polled "middle-class American[s] believe they will need to work until they are at least 80-years-old in order to retire comfortably" but may not have the okay from employers. See "More American Say 80 Is The New Retirement Age" (October 23, 2012). New York Daily News reporter Heidi Evans refers to 80 as the "new 50." NBC News recently reported that creative seniors are setting up consulting practices, starting businesses, seeking jobs with non-profits or working part-time. See "Retirees Keep One Foot in the Workforce" by Shelly Schwartz (April 8, 2014). Great Jobs for Everyone 50+ by Kerry Hannon addresses opportunities by category such as snowbirds or retired teachers as does the AARP in its 2011 guidance for those who head south for sun when bad weather in winter looms.

Some say that age is an illusion in terms of what one can do. Famed wit George Burns is quoted as saying that "You can't help getting older, but you don't have to get old." Sadly Mr. Burns did not appear for his famed booking at London's Palladium to celebrate 100. A bad fall led to its cancellation and he celebrated this marker elsewhere. In "Curtain Falls: George Burns Dies at 100" (Seattle Times, March 10, 1996), reporter Howard Reich writes that Burns extolled the virtues of passion about what one does, adding that "If you can fall in love with what you're going to do for a living, you got it made." Hear, hear for the motivational cue.

From an economic perspective, global demographics open the door wide to tremendous business opportunities for financial service companies. Providing advice to seniors as well as employers that want gray matter is one promising area. Restructuring existing retirement plans is yet another. Consider the recent announcement that BT Retirement Saving Scheme has arranged for longevity insurance and reinsurance "to provide long term protection to the Scheme against costs associated with potential increases in life expectancy of members." The 16 billion GBP is "the largest ever in the UK and involved the creation of the BT Pension Scheme's own insurance company." See "BT Adds Longevity Insurance to Limit Risks of Pension Plan" by Amy Thomson and Sarah Jones (Bloomberg, July 4, 2014).

Enjoy the popcorn, watch the summer flick and then ponder what you intend to do with the rest of your life. If that means putting together your business plan for creating value-add services to companies and individuals in this new era, go for it. There are lots of ideas for profit.

Booming Seniors Market and Making Money

I have been thinking a lot about aging of late. For one thing, I have an elderly father in a nursing home. Second, several of my mentors are retiring. Third, I have observed a significant uptrend in snappy red convertible automobiles being driven by people with gray hair. Fourth, anyone involved in the pension industry is acutely aware of the changing demographics around the world and the economic impact for company sponsors and participants, respectively. Whether focused on an investment strategy for a defined benefit plan or selecting choices for a defined contribution scheme such as a 401(k) plan or both, fiduciaries are understandably focused on how longer life spans are likely to alter the money landscape.

According to the Administration on Aging, part of the U.S. Department of Health & Human Services, the numbers tell an important story.

  • Approximately one person out of eight Americans is characterized as "older."
  • Those persons over 65 years of age numbered 41.4 million in 2011 and are expected to grow to 79.7 million in 2040.
  • Persons aged 85 years or more are expected to increase from 5.7 million in 2011 to 14.1 million in 2040.
  • Approximately 3.6 million elderly persons had means that put them in the "below poverty level" category in 2011.
  • The primary source of income, as reported by 86% of "older persons" in 2010, is Social Security. Income from assets is reported as a source of income by 52% of older persons. Only 27% report private pensions as a source of income. An even smaller number - 15% - cite government employee pensions as a source of income.

Other statistics can be found in "A Profile of Older Americans: 2012."

Whether you see this wave of senior citizens as welcome news or cause for worry about how programs will be financed, demographic patterns are a reality. As a result, performance-hungry investors are searching for winners.

One possibility is non-medical care companies that offer services such as grocery shopping and driving seniors to doctor appointments. Karen Axelton, Chief Content Officer for GrowBiz Media and former executive editor of Entrepreneur Magazine, describes the "big opportunity" for franchise companies to play a vital role for those persons who can afford help and want to live at home. She adds that senior relocation is another revenue generation opportunity, citing a large jump in companies that have joined the National Association of Senior Move Managers. Adult day care is yet another suggestion. See "Franchisees Profit from Growing Senior-Care Market."

Rizwan Koita writes that health care spending in the United States continues to grow, from $2.4 trillion or 17 percent of GDP in 2008 with an expectation of $4.4 trillion in spending or 20 percent of GDP by 2018. A CNBC commentator and CEO of health care analytics company Citius Tech, Koita explains that venture capital and private equity professionals are funding businesses in what is seen as a fast expanding health care technology industry. "Given the high level of inefficiency in the health care ecosystem today, there is significant potential to reduce costs while still protecting the financial interest of all stakeholders...[t] is tremendous opportunity in using technology to enhance health care delivery for the aging population and reduce costs." See "Aging Populations Mean Big Opportunities in Health Care IT," CNBC Commentary, November 1, 2012.

"The Prophet of the Coming Aging Boom" by Forbes reporter Susan Adams (October 19, 2011) credits Ken Dychtwald as being upbeat about "a potential explosion of products and services, from new dating websites to longevity insurance to new kinds of food" that cater to the preferences and needs of mature consumers. This CEO of the specialized research and consulting firm, Age Wave, is excited about the chance to innovate and "make serious money" from the gray hair movement. His recent presentation entitled "Transforming Retirement" is worth the 43 minutes it takes to watch on You Tube.

In the April 2013 issue of "Health Capital Topics," senior industry guru Bob Cimasi describes the massive overhaul underway for numerous stakeholders as the result of new regulations. A strong case can be made that business opportunities abound to assist consumers, employers, states and healthcare providers, respectively, as the implementation of the Patient Protection and Affordable Care Act ("PPACA") proceeds.

Interested readers can visit the vast library of articles provided by Health Capital Consultants. "Global Population Ageing: Peril or Promise?" (World Economic Forum, 2012) includes numerous statistical tables and discussions about the economic implications of changing demographics. The American Society on Aging website may likewise be of interest.

Disclaimer: This post is not intended to provide investment, financial, accounting or legal advice. It is left to the reader to perform adequate due diligence about any investment being considered or in place already. Furthermore, this blog post does not present an exhaustive list of the investment implications being discussed as the result of a global aging population.

Unemployment at the Movies

If you haven't yet seen "The Company Men" with Ben Affleck, Tommy Lee Jones, Chris Cooper and Kevin Costner and don't need a lot of laughs, it's a worthwhile flick about the U.S. economic problems of late. The plot centers on a successful sales executive who gets the boot from a Massachusetts conglomerate that started out as a manufacturer of ships. A wholesale layoff of otherwise talented professionals still leaves the company exposed to a hostile takeover so another round or two ensues, with Affleck's boss ultimately getting the pink slip from his lover, played by a glamourous Maria Bello. (Hey, it's the Hollywood version of Corporate America.)

Similar to "Up In The Air" with George Clooney, this film's message seems to be that management is bad, labor is good and that family is what really counts. While I wholeheartedly endorse the message about counting one's blessings in the form of loved ones, friends and colleagues, I'm agnostic about the general "we versus them" theme and prefer to consider one company at a time.

If we've learned anything from the past decade, it's that production is increasingly mobile across borders. Beyond that, C-level leaders in the United States have a legal duty to their shareholders to create wealth (which is not necessarily the same thing as boosting the bottom line but that's a topic for another day). While I am not alone in opining that well-run companies recognize the importance of human capital (employees, clients, vendors) and that is why they can generate healthy returns for their investors, it is also important that individuals retool as often as is necessary to remain competitive.

In 2002, Daniel H. Pink extolled the virtues of independence in his best selling book entitled Free Agent Nation: The Future of Working for Yourself. The numbers speak for themselves with a continued increase in freelancers, temps, affiliated parties and smaller consulting networks that work from home or close by, create their own revenue path and are happy campers. However, for those who desire more stability and structure by working for larger employers, the concept of free agent is still worth pondering. Specifically, if your industry is changing around you, maybe it's time to take stock of how you stack up against others. My dad, now a retired engineer, went through this process about fifteen years ago when he took it upon himself to study computer assisted design at night since younger hires were facile with the newer technology tools and he was not.

As a young banker, I had a boss who urged me to think of myself as a box of raisin bran. Every year, he told me to figure out how to be "new and improved." I would complete a skills inventory checklist and then commit to improve as needed.

"The Company Men" was an enjoyable cinematic outing and a great reminder that dues paying never stops. Learning and career development is a lifetime endeavor, especially now. With longer lifespans and, for millions of people, the need and/or desire to work beyond 65 years of age, it is critical to stay current with requisite skills and experience.

Not 21 But Lots of Great Opportunities Ahead

A man is not old until his regrets take the place of dreams.
- - - - John Barrymore, "Good Night, Sweet Prince" 1943

If Betty White can rock Saturday Night Live to its highest ratings at the age of 88 and Sunset Daze is media gold for the senior reality television set, there is hope for anyone who wants to stay in the game rather than "retire" from the mainstream. In "Famous folks launched careers after 50" by CNN's Ethan Trex (May 16, 2010), more than a few individuals have realized great commercial success as seniors, including Colonel Sanders (of Kentucky Chicken fame), President Ronald Reagan and Takichiro Mori (twice reported by Forbe's as the world's richest man "with a net worth of $13 billion").

Good news is everywhere for the gray haired set if you accept current research about preservation and growth. In "Creativity and successful brain aging: Going with the flow" by Susan Krauss Whitbourne, PhD (March 23, 2010), having friends, enjoying leisure activities such as bridge or dancing and developing a "flexible mental attitude" are three hallmarks of a productive and enjoyable "later life."

At a time when the world is getting older, employers are challenged with managing the costs of providing post-employment retirement benefits as well as having skilled and experienced workers in place.

In a summary slide show, Business Insider excerpts from the 2009 EU Ageing Report to paint a sober picture of how age impacts gross domestic product ("GDP"), assuming that retired persons truly exit the economy and are given no opportunity to continue working in some fashion. (Keep in mind that official statistics do not fully capture actual employment.)

Country Pension Cost compared to GPD in 2007 Estimated Pension Cost compared to GPD in 2035 Estimated Change in Working Age Population by 2020
Netherlands 6.6% 10% -4.3%
Luxembourg 8.7% 17% -1.1%
Denmark 9.1% 11% -4.3%
Bulgaria 8.3% 9% -5.6%
Czech Republic 7.8% 7.6% -8.3%
Belgium 10% 14% -3.5%
Poland 12% 9.3% -5.7%
Hungary 11% 12% -5.0%
Italy 14% 15% -3.0%
Sweden 9.5% 9.4% -6.0%
Malta 7.2% 9.7% -7.1%
Greece 12% 19% -3.9%
France 13% 14% -5.5%
Finland 10% 14% -8.5%
Slovenia 9.9% 15% -6.6%

 

Things are not too much better in the United States with respect to financial solvency and unfunded retirement benefits. According to "The Market Value of Public-Sector Pension Deficits" by Andrew G. Biggs (Retirement Policy Outlook, American Enterprise Institute for Public Policy Research, April 2010), "public-sector pension plans have only a 16 percent probability of being able to cover accrued benefit liabilities with current assets."

The ramifications are huge in so many ways. Increased taxes, rescinded benefits or both are vote killers so you have to know that THE demographic time bomb is going to become political radiation in short order.

Until then, if you are healthy and able to continue working or are otherwise financially independent, enjoy the good life. Way to go!