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Posted on August 2, 2019

The Coming Paradigm Shift in Retirement Planning

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“It is not the strongest or the most intelligent who will survive but those who can best manage change.” – Charles Darwin

  •  Artificial intelligence (AI) educatorteachers of the future who will help people learn how machines learn and adapt.
  • Digital memorialist and archivistlibrarians of the future who’ll collect, manage, curate and archive deceased people’s digital identities using AI.
  • Drone experience designercustomer service representatives of the future who will interact with companies that use drones for services such as deliveries or surveillance and make certain customers receiving the drone services have the best experience.
  • Biofilm plumberplumbers of the future who will be good at working with their hands as they “install and maintain coatings of biofilm on the walls of sewage and wastewater pipes.” Biofilms are friendly bacteria that assist in breaking down complex organic waste.

What I want to share with you is how technology and the speed of change will drastically affect your lives in the near future.  In financial planning, we often have to assign an arbitrary age to plan to for someone’s lifespan and we usually use 100.  Nearly every person responds, “Oh lord, I hope I don’t live to 100”.  The paradigm shift is that not only is this possible, it is probable, and it is also quite possible you will be in better health and physical shape than you are today.  How does that change your thinking?  So, take that one step further.  If you start your working career at 21 and retire around 65 this means that you have to save everything you need in 44% of your lifespan for half of your remaining time on the planet.  For most of us that probably doesn’t pencil out well.  Several very prominent players in the regenerative medicine world believe that we will have eradicated ALL degenerative diseases within the next 10 years.  Think about that, no more diabetes, rheumatoid arthritis, MS, just to name a few and cancer too will be a thing of the past.

Although many of these procedures and technologies already exist today, they are not part of our current medical protocol. This means they are not covered by insurance, leaving it up to us to cover the costs.  Often, they are only available outside of the US which means travel as well.  This too is a financial consideration but what’s the old saying?  “You have nothing unless you have your health.”  Those who have traveled this path themselves or with a loved one know the meaning all too well.  So, what’s it worth to you?

Bottom line, we perhaps need to rethink and reinvent a new retirement paradigm.   While all of this new technology is peachy, what about the dying arts like mechanics, fine finish carpentry work etc.  What if you could still be a valuable contributor in a craft or business well into your 90’s.  Certainly there are plenty of examples that exist today but they are the exception and not the norm.  A classic example, when I had my firm in San Jose, I had a number of retired nuclear engineers from GE as clients.  Some years ago they were all summoned for work following the recent renewed interest in nuclear power. The new demand for their labor and skills in building power plants was needed because they were some of the only ones with working knowledge on their construction.

In short, the old idea of work, retire, get old and fall apart and die.  Aging is now being looked at as a disease itself and we are well on the way to figuring it out.  So, if this is the case, where does that leave our entitlement programs.  When Social Security was first introduced, few ever lived long enough to collect it and now it is significantly underfunded for today’s needs.  What of pensions?  These are questions we have hardly begun to ask much less coming up with solutions.

What will work look like in the future?  We may not have heavy labor jobs that tax our physical bodies as many of these things will be done by robots.  This would reduce work-related injuries and early retirement on disability allowing us to again, work longer but with less physical stress.  Artificial Intelligence has already taken center stage in many industries and the deep learning AI is moving so fast it is frightening.  Who knows how many jobs this will replace in the future yet many of us will be forced to look at living and working a lot longer than our parents did.

All I know is that change is coming and it is coming faster than most people realize.  As an example, many think autonomous cars are not going to happen in their lifetime but several companies including “Bellill have autonomous flying cars in the skies above you in the next 6 years!  Think of that, if you could live in the Sierra Foothills and have the same commute to work in San Francisco as you did from San Carlos.  How will that change real estate prices?

As a planner, it makes my job very challenging as we can only plan for today and what we can see on the horizon but the universe often has other ideas.  It reminds me of the old saying, “How do you make God laugh?  Show him your 5-year plan.”

Suffice to say, all of this is on my radar and I make it a point to discuss these ramifications as often as possible.  Ladies and gentlemen, the future is here!

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