The world’s demographics are shifting, with profound implications for nearly every sector. Among the most significant of these shifts is the rise of the longevity economy, a term used to describe the economic impact of an aging population. By 2030, it’s estimated that nearly one in five people in the United States will be over the age of 65, and globally, the number of people over 60 is expected to double by 2050. Canada, now described as a “super aged nation” too, is seeing these changes, with the proportion of seniors steadily increasing. By 2036, nearly one in four Canadians will be aged 65 or older. This demographic transformation presents a unique set of challenges and opportunities, particularly in the financial services sector.
For financial institutions, this means a fundamental rethinking of products, services, and overall customer engagement. The question is: How are they evolving to meet the needs of this expanding market segment? The answer, in short, is that they are adapting rapidly, though not without some growing pains.
Understanding the Longevity Economy
The longevity economy isn’t just about longer lifespans—it’s about the economic potential of older adults. It’s about recognizing that as people live longer, they are likely to remain in the workforce longer, maintain purchasing power into later years, and require specialized financial products that cater to a longer life and retirement horizon. In Canada, seniors represent a powerful consumer group. According to a 2023 *AARP* study, older adults control nearly 70% of disposable income in North America, with Canadians aged 55+ accounting for a growing share of wealth.
Financial institutions are realizing that serving this market is no longer optional—it’s essential. The sector is responding with a mix of innovation, collaboration, and strategic realignment. The opportunities are clear: meet the financial needs of a growing, aging population while fostering brand loyalty among a market segment that controls significant wealth.
Key Trends in the Financial Services Sector
1. Retirement Planning for Longer Lives
The conventional retirement model of saving aggressively in your 30s and 40s, then enjoying decades of leisure in your 60s, is outdated. People are living longer, healthier lives, and as a result, their later years and retirement needs are becoming more complex. Financial institutions are responding by designing new products that emphasize long-term sustainability.
In Canada, RBC Wealth Management has launched a new “Path to Longevity” initiative aimed at helping Canadians plan for increasingly longer lifespans. While relatively new in the market, there has been increasing evidence that the bank will continue to support a longevity strategy across many of its business units.
Even though financial services sector has been slow to respond in Canada, many of the financial services and investment management firms in the United States like Merrell Lynch, Bank of America, Raymond James and BlackRock are well underway in transitioning their brand narratives from “retirement,” to “living longer, healthier lives” for all the obvious reasons.
In a recently released, co-published report by Morgan Stanley and Oliver Wyman Research, titled “Longevity Unlocked: Retiring in the Age of Aging,” it states that “increasing life expectancy brings both opportunities and challenges for wealth, asset managers and insures” yet “seizing this opportunity through a retirement ecosystem mindset could unlock $400 billion USD in revenue by 2028.
2. Healthcare Planning and Financial Wellness
Healthcare planning is also a growing priority for Canadians as they age. The cost of healthcare, particularly long-term care, is one of the biggest financial challenges for older adults and their family caregivers. According to the Canadian Institute for Health Information (CIHI), long-term care expenditures in Canada are projected to increase by over 50% by 2035. Financial institutions now are beginning to integrate healthcare expense projections into their planning tools, with offerings that help individuals understand the impact of healthcare costs into their non-working, and later life years.
Sun Life Financial has integrated long-term care insurance and health savings accounts into its retirement products to help Canadians plan for potential healthcare needs. And, in collaboration with TELUS Health, Manulife has also introduced new digital health tools for older adults, helping them to manage everything from prescription refills to virtual doctor visits—all part of an effort to promote overall financial wellness.
In the US, we’re also seeing a number of transformational insurance and healthcare models forming, from plans focused on changing how risk is managed, like Foxo Life, to programs focused on preventative health management like Fountain Life
3. Digital Solutions for an Older Market.
Another key trend is the increasing reliance on digital tools to meet the needs of older adults. Traditionally, older consumers have been underserved by technology. However, as digital literacy increases within this broad demographic (50+ yrs old), there has been an increase in activity across the financial service sector and Canada’s AgeTech start-up community, investing in the development of user-friendly, intuitive digital platforms specifically designed for older adults.
4. Investment Strategies for Older Demographics
As older adults seek to protect their wealth, there’s an increasing demand for more conservative investment strategies. This has led to a boom in low-risk, low-fee investment products. According to a 2023 report by Morningstar, more than 40% of assets in retirement plans are now in target-date funds—investments designed to become more conservative as the investor approaches their non-working years, which often includes age-related health issues and reoccurring expenses.
In Canada, we’re seeing an increasing interest in life-cycle funds, which automatically adjust the investment mix as clients age, shifting from high-growth equities to lower-risk fixed-income assets as one approaches their non income producing years. Many of these funds are particularly popular among those who want to ensure a steady stream of income without the burden of constantly managing their portfolio.
However, with nearly three million households in Canada set to retire over the next decade, current retirement planning systems are not equipped to handle this weight. In fact, in a recent Deloitte report titled, “Running out of Time,” their findings show that 55% of near-retiree households will have to make lifestyle compromises (or work longer) to avoid outliving their financial savings. Even more concerning is that retirement savings growth has stagnated, widening the retirement readiness gap and increasing financial vulnerability for older adults.
“As a society, we focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years.”
The Road Ahead: Challenges and Opportunities
Despite the progress, there are challenges in effectively reaching the longevity-minded consumer. Traditional financial services models have been slow to adapt, with some institutions still not fully embracing the potential of this growing market. A 2023 study by Capgemini found that nearly 40% of older adults still feel underserved by their financial advisors, citing a lack of personalized solutions that meet their unique needs.
In an open letter to its shareholders, titled “Time to Re-think Retirement,” Larry Fink, CEO, of Blackrock, the largest asset management firm in the world with over $100 Trillion under management wrote, “As a society, we focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years.”
However, despite these ‘call to arms’ by industry heavyweights, the opportunities remain vast and under-served. Brands that truly embrace the longevity economy will not only benefit from meeting an underserved market but also from fostering customer loyalty across a longer lifespan. The financial services sector is learning to innovate, and with that innovation comes the chance to redefine what it means to serve the wealthiest and fastest-growing demographic in the world.
As the longevity economy continues to re-shape global markets, financial services firms in Canada and beyond are quickly adapting to provide products and services that meet the needs of a rapidly aging, global population. Through a mix of innovative financial tools, digital accessibility, and partnerships that address broader health and wellness concerns, the sector is positioning itself to thrive in this new, age-diverse landscape. The longevity economy isn’t just about longevity—it’s about creating effective financial products and solutions that ensure people can live longer, healthier, and more secure lives.
