Reviewing our retirement plans
Last week I was talking with my parents and sister about what the future holds for us, in terms of jobs, economy and social/human behaviour. It has been quite interesting to see how different generations understand what might happen in the next few decades.
My father is 72, my mother is 62 and my sister is 31. These differences in ages have a big impact on how they see their life expectancy and ideas about retirement. While my father understands that he will live until the 80 something, my mother expects to live at least until 100 years old. The crucial point is that my mother has an expectancy aligned with what might happen while my father expectancy is based on the past generation, mostly seeing the average age of people today. Is understandable, as he is much closer to the average life expectancy in Brazil (around 80 y/o), but the next 10 years might extend this number even longer.
Interestingly, even though my sister is a physician she hasn’t stopped to think about how long she might live. And this is a crucial mater today. I believe that my father will be (negatively) surprised if he reaches 90 or 100. His mother is will celebrate 91 next month, and she is incredibly healthy (given her age). My sister and I, likely, will reach 120 or more. And not considering this new life expectancy might be dangerous.
I can’t stress enough the need to consider this extended life-span. If my father reaches 100 years, it means 28 more years in which we need to consider his financial wealth as well as his mental and physical health. Same with my mother. But he, and most of his friends live as there are only 10 years or more down the line. So, what happens to your financials if you live 18 years more than you expected?
In the end, this means we need to rethink retirement. It will likely happen much later. And we need to consider the different kinds of work that we will do once our bodies are no longer as healthy as our minds.
Our understanding of work/life balance and economics has to change. When you live until 120 your active work life will likely be much greater ever considered. What about 70 years of active professional life? How do you stay relevant during this long? How likely are you to change positions, professions, geography and industries? How will we plan our retirement savings? Etc.
And I’m not considering the impact of AI and automation… What does the future hold for us?
