Ric Edelman: Longevity Is Disrupting Traditional Retirement

What You Need to Know

If people live to be 120, the concept of a single, linear 40-year career stops making much sense.
Future generations may have a more cyclical relationship with work.
Greatly expanded longevity also raises questions about housing preferences and the utility of annuities.

While most people have heard about the potential for great gains in life expectancy, relatively few are truly taking into account the effects of anticipated advancements in modern medicine, especially in the treatment of chronic conditions such as cancer and heart disease.

In fact, according to Ric Edelman, young people should start thinking about their potential longevity in a fundamentally different way than their grandparents’ or even their parents’ generations. This in turn means that they need to rethink their concept of work, saving, investing and retirement.

As Edelman put it during a presentation at a recent New York Public Library event, “Financial Planning in the Age of Longevity,” if people expect to live to be 120 on average, the concept of a single, linear 40-year career stops making much sense.

“It all comes down to the human genome,” Edelman argued. “Our newly established ability to use the genome to treat chronic disease will be an absolute game changer for longevity. New technologies to help treat cancer and other diseases will soon completely change our ability to effectively treat disease and address the negative effects of aging. If you are paying attention, you can see that we are set for some astonishing progress on so many diseases.”

According to the investor and author, this great leap forward in longevity may sound fantastical, but it has actually happened before and was also foreseen by savvy observers. For example, the development of current medical techniques and other social advances helped to boost longevity in the United States by more than 20 years over the course of the 20th century — and social frameworks had to change accordingly.

“The reality is that ‘retirement’ was itself an invention of the 20th century,” Edelman said. “Back in the 1800s and early 1900s, if you were alive, you worked. Then came the great industrialization, and you started to have this concept of a career and a pension. Frankly, that was a totally different environment than what we should expect for the long-term future.”

A More Cyclical Working Life

With the future just that, it is possible to learn from the past and present to make conjectures about what may come to pass. Regarding greater longevity and the concepts of work and retirement, Edelman suggested, we are likely to see a movement to a more circular or periodic perspective.

“Today things are still pretty linear,” Edelman said. “You are born, you go to school, you get a job, you retire and then you die. It’s one thing at a time. I don’t believe the future will look like that. The long-term future is a cyclical lifeline. You may, for example, go back and forth multiple times between the workforce and getting further education, and you’ll see that pattern going well into people’s 80s and 90s.”

What is almost certain, Edelman said, is that a 40-year career becomes out of date if lifespans range to the 110s or 120s. It is also unlikely that a person will be able to select one single job or even a single field of employment that will remain relevant over a working lifetime that could last as long as 90 years.

Other Considerations

Longer lifespans will not only change the way that people work and invest for retirement, Edelman argued, but they will also result in changes to the way that people live their day-to-day lives — “think housing, vacations and more.”

“I’m really intrigued by this concept of naturally occurring retirement communities, or ‘NORCs,’” Edelman said. “It comes out of some research conducted by the Stanford Center on Longevity, which found that there are actually many middle- and lower-income communities here in the U.S. that demonstrate markedly higher life expectancy than their peers.”

Longevity Concerns

While longer lifespans will be a blessing for future generations, Edelman said, there will also be challenges to contend with. For example, even with great advances in medicine, longer lives can still involve chronic or acute disease, meaning that long-term care and the expense of accessing health care will be big concerns for many.

Estate planning could be a challenge, too, especially as family trees are changing in dramatic ways. As Edelman observed, some 42% of the U.S. population now have some type of step relation in their immediate family, while 17% of adults have married more than once and 22% of adults have gotten a divorce.

“It all makes for very complex family trees, especially when you factor in the future of far greater longevity,” Edelman argued. “You may need to think through many more factors and considerations in the estate planning process. There will be hard decisions to be made.”

And then there are other fundamental questions: If you retire at age 90 and live to age 120, will your money last? How will Social Security change? Can annuities or life insurance work effectively in a world where many chronic and acute diseases are curable, thereby reducing variability in life expectancy?

“We don’t know all the answers today, but the bottom line is that the old way of working and retiring just won’t work in the long-term future,” Edelman concluded.