Money

Making Sense Of What Life Will Look Like When You Retire In 2045

by Keara Dowd

March 20, 2017

Flying cars. Personal robots. A colony in space.

Every generation fantasizes about the toys of the future. With technology advancing constantly, nothing ever seems out of reach, despite the fact that we are all still waiting on flying cars, personal robots, and a colony in space.

For many in their 20s and 30s, long-term financial stability feels just as out of reach as going for a jog around a neighborhood on Mars. We entered the workforce during the most uncertain economic time in recent history, and the slow recovery hasn’t done much to curb fears.

The landscape continues to change, and that change has a direct effect on one very crucial aspect of later life: retirement.

It may seem far away, but retirement needs to be a financial priority for the millennial workforce. An aging population and slow economic growth is going to bring up challenges for this generation come 2045, and the best way to stem the tide is with preparation.

To figure out how much money people will need to retire in 2045, we need to look at what life will actually be like. Rising health care costs and longer life spans mean people will need more money than ever before when they stop working, which is why workers should be saving 15 percent of their income for retirement, according to Greg McBride, chief financial analyst at Bankrate.com.

Most Americans aren’t following this advice (1 in 3 people have saved no money for retirement). A June 2015 study done by the Government Accountability Office shows that the average American between the ages of 55 and 64 has $104,000 saved for retirement, which would translate into just about $310 per month available in retirement (if the money was invested in a lifetime annuity). A survey by GOBankingRates found that millennials (ages 18–34) are 40 percent more likely to have no retirement savings than Gen Xers (35–54). Three in five have opened a savings account for retirement, but 30 percent have less than $10,000 saved. This is in large part due to age (it can be difficult to save when first beginning a career). However, it also opens the conversation about working past what we consider the normal retirement age, which some think may be the saving grace of the millennial generation’s retirement plan.

“The reason why that’s not a panacea is that it’s not up to you,” said McBride. “You might say ‘Hey I’m going to work until I’m 70,’ then comes that Friday afternoon when you’re 63 and you get called into the office and handed a pink slip.”

The “fun” part of the future (the robots, machines, and other technological advancements) may add to this group’s woes. McBride says the industry of innovation tends to favor a younger workforce, one that might not have room for workers near retirement.

“The economy will grow to where it’s most efficient and new ideas are sprouting up,” said McBride. “They tend to come from younger entrepreneurs.”

But it’s not all bad news. McBride compares the inevitable industry change to one America has already gone through.

Over time companies are going to get leaner, and it’s going to displace more people who are going to have to turn to contracting work.

“You look back 130 years ago, 80 percent of our workforce worked in farming,” McBride said. “We produce more food now than ever in history, and we have about 2 percent of our workforce in farming. We could undergo a similar transition in the decades ahead due to technological advancements.”

And those same technological advancements that could displace the workforce could also be the catalyst to a faster-growing economy—one that could help make retirement accounts work harder for savers. It will also likely alter the way we think about traditional jobs.

“Over time companies are going to get leaner, and it’s going to displace more people who are going to have to turn to contracting work or freelance work or starting their own business and generating their own revenue,” McBride explained.

The technology that these companies could make available to us is vast. New York-based Dan Ackerman, editor at consumer technology CNET Magazine, says that while the exact technology may be unpredictable, we can count on relying on our devices more.

“We’ll see a movement toward this unified theory of personal devices,” Ackerman said.

This applies to different areas. Mainstream augmented reality with Google Glass and other wearable products will connect technology with the world around us. Money, computers, and other personal information will all be loaded onto one personal device that simplifies the process. This could spell the death for one common item: the wallet in your back pocket.

“Carrying around a piece of leather with folded up pieces of paper and plastic inside” will be outdated, according to Ackerman.

Technologists are also trying to finally do away with computer accessories such as the keyboard and the mouse.

“People are trying a lot of things: touch screen, gesture control, voice control,” Ackerman said of possible alternatives. “They have not found a better solution for that yet, but I’d be very interested to see if we can retire things based on this ancient typewriter concept.”

No vision of the future is complete without the mother of all advances: robots. Ackerman says that in a way, we already have them, and by 2045, we can expect them in every household.

“We used to think of a robot as this humanoid shape that would be our buddy and go on adventures with us and be a leader. That’s sort of, I think, gone away,” said Ackerman.

“Instead what we’re left with is this new generation of personal digital assistants. These are AI (artificial intelligence) controlled systems that have access to a lot of our personal information.”

Amazon has already released Echo, a voice-controlled digital assistant for the home that can play music and videos or look up information. As we aim to improve their performance, we will inevitably give them more access to our personal information, keeping the issue of electronic privacy in the forefront of consciousness.

“The over sharing generation might have fewer concerns about giving Google or Facebook or Amazon open-book access to everything they do online,” Ackerman said, though he reiterated that smartphones now are as secure as ever.

“You see how much trouble they have getting information off the phone of a criminal suspect, it’s almost impossible to do if you have the latest operating system on it with biometric security.”

But the advancements won’t just be for convenience. Medical research is making strides, most consequentially in brain mapping. The more we learn about the brain, the more power we can unlock. This was one of the subjects of the Global Future 2045 International Congress in 2013, where innovators across different industries came together to present their progress and share where they expect to be in 2045.

We used to think of a robot as this humanoid shape that would be our buddy and go on adventures with us and be a leader.

With developments in brain mapping, we can help treat (or cure) paralysis and mental health disorders—in addition to unlocking unknown levels of cognitive function. There are any number of diseases that would either be cured or effectively eliminated with the right understanding and control of the brain, which would inevitably make life spans longer. Some at the congress said that the advancements might eventually eliminate aging altogether.

However, like everything in society, these advancements will likely only be available to those most fortunate. This could widen an already large cultural gap between the haves and the have-nots. The rich will have not only the personal technological advancements to make life more convenient, but will also have the scientific and medical capabilities to dramatically improve health, quality of life, and lifespan.

Which comes back to the problem at hand: the future population will have to live longer off of retirement accounts that aren’t properly cultivated in a time when life is more expensive.

One economic trend that could bode well for retirees is the shift toward contract work. McBride says that as companies become more efficient, they’ll rely more on freelancers to complete specific tasks, a role that could be filled with retirees looking to supplement their savings while maintaining flexibility. Picking up projects could help keep retirees afloat, even if their savings are subpar.

But these predictions are just that—predictions.

“The pace of technology and innovation increases so rapidly that it’s almost impossible to look more than just a few years into the future with any kind of certainty,” Ackerman said.

“If you think about it, we’ve only hit the 10th anniversary of the iPhone this year, and it feels like such an important product that’s been with us forever.”

Illustration by Emily Lin

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