What If We Live Too Long?

Traditional financial planning is based around just a few simple things. How long until you plan to retire? How much do you plan to spend in retirement? How long does you money need to last (when will you die?)? Using this info and accounting for client’s individual tolerances for risk we can tell people how much to save and where to invest and give a percent chance of reaching you goal. Maybe you need to wait longer to retire, save more, or spend less in retirement and then you can go about your life on your way to a joyful couple decades of “golden years”.

I listened to a keynote speech by Ric Edelman this winter wherein he explained that I was committing a form of malpractice by doing financial planning just as I described. His reasoning was this: Your clients are going to live too long for your plan to work. Ric is very optimistic about the future of science and technology and believes that people are soon to reach average ages of 150 years. He also believes death is going to be cured*.

However eyebrow-raising his statements were (I am quite skeptical about the curing of death for basic Christian worldview reasons) it did get me thinking. The idea of “retirement” as we know it is pretty recent**. With an economy dominated by agriculture since time immemorial up until the last few hundred years you simply worked until you died. With the industrial revolution and onset of the modern age to future tech we’ve seen increased prosperity and growth that have allowed the wealthy (and even not-so-wealthy) to retire from working. This has been neat, but what happens when we live to 100, 120, or even 150? It messes stuff up if that happens.

It’s important to consider that you may never retire (especially if you’re under 50), at least not in the traditional sense. Obtaining “financial independence” will be the new goal. Being able to work when you want on what you want is a far more noble and dignified goal than just paying your dues until you can be lazy anyway. Instead of just saving more and investing in the right spots, which are still extremely important, financial advisors will need to help coach people to gain new skills and further their education for several career changes, because your job might become obsolete or you might get bored doing the same thing for 100 years.