LCF Research's article last week focused on the growing supply and demand imbalance between jobs and job seekers. This was followed later in the week by the publication in the Daily Telegraph of some related data regarding the ticking demographic time bomb in the UK:
- 10 million people alive in the UK currently will live to be over 100.
- About 500,000 people a year in the UK will be celebrating their 100th birthday by 2066, compared with about 10,000 now.
Needless to say, the press comment on this data made much of people spending one third of their lives in retirement. In my opinion, this suggestion is dysfunctional because people will not be able to save sufficient amounts to cover their living costs during retirement whilst leaving sufficient funds to cover their present living costs - some of the key drivers for this were spelt out in last week's letter.
We have lived for centuries without pension funds and state support on the scale presently enjoyed until recently - I therefore envisage the way forward by taking a leaf out of history - we will need to:
- increase the percentage of our lives spent working and reduce the percentage we expect to be spent in retirement.
- start saving more through a combination of starting earlier, reducing discretionary expenditure in favour of saving, and seeking investments which deliver better returns.
- organise ourselves into more sustainable communities by bringing together people with a range of skills required for dealing with life time needs, along the lines of villages of times past. For example, I suspect that there will be a trend of returning to a time when more generations live under one roof for longer, which can bring the benefits of increasing the total income per household and reducing the expense of looking after both children and the elderly.
The above demographic change will worsen the imbalance in jobs and job seekers. However, I believe that the process of seeking investments which deliver better returns provides us with the opportunity to look for businesses which are growing (particularly internationally) based on providing goods and/or services which provide attractive economic benefits to customers - such businesses will be increasing the number of employees and hence contributing to reducing the jobs/job seekers imbalance - these are the sort of companies which LCF Research's investment template identifies.
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