What changes if life expectancy becomes 100 years?

If you’re listening to MIT aging expert Joseph Coughlin, the answer is “everything” (see “Exclusive Interview with Joseph Coughlin: Why the Retirement Fiduciary Cannot Ignore Age Longevity,” FiduciaryNews.com, March 15, 2016).

Folks won’t be talking about job hopping anymore, they’ll be engaged in career hopping. It’ll be possible to have three careers spanning 20 years apiece, not including transitional overlap. (Call me forward thinking, but that was my plan all along going back to my undergraduate days in the late 70s/early 80s.)

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If you’re going to career hop, you’ll probably need to beef up your academic training, too. But that won’t mean living full-time in the boarding room of some distant fostering mother. You’ll be able to learn at your own pace in the comfort of your own living room.

Distance learning won’t be a novelty, it will become a necessity. And, if you can conduct business via video conference calls, why can’t you simply Skype into virtual classrooms?

Think about this. If MOOCs (Massive Open Online Courses) become the norm for higher education, doesn’t it make sense that MOOCs (Massive Open Online Careers) also become the norm?

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In the past, assembly-line manufacturing required physical proximity. The final assembly of any physical product will always need people near to each.

The same is not true for subassembly manufacturing. They can be put together off-site (perhaps even a home).

Much of the creation and assembly of non-physical products (think books, movies, and video games) can occur within a virtual realm. Expect many second careers to blossom in this realm. Why? Because you’ll be able to work from the sanctity of your quaint “retirement” (from your first career) village in Florida or Arizona.

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These changing demographics, (according to CDC/NCHS statistics, the average life expectancy increase from 47 years in 1900 to 78 years in 2007), will require both plan sponsors and retirement plan service providers to rethink the meaning of saving for retirement.

It will also necessitate policy makers to consider employee-centric company sponsored plans rather than employer-centric company sponsored plans.

For example, rather than directing income be deferring into a corporate controlled retirement plan, we may begin to see broader use of retirement vehicles that direct deferred income into individual retirement plans (perhaps with greater fiduciary protections than we see with today’s IRAs).

Plan sponsors need to prepare themselves for this eventual evolution in the way the package and present retirement benefits.

Larger companies might continue to be saddled with the overhead costs of the “old” 401k (like legacy pension plans continue to burden them today).

Smaller and newer companies, however, might be able to take advantage of the “new” 401k more quickly.

Employees may shirk at the idea of taking on more responsibility for their retirement. The advantages of greater individual control won’t be as obvious to them as they were when we evolved from a defined benefit environment to a defined contribution environment in the 1980s.

Retirement plan service providers, too, will have to adjust. They will have to accept increased fiduciary responsibility for IRAs (or whatever vehicle IRAs become).

More significantly, though, as Coughlin suggests, they will need to change their frame of reference when it comes to “retirement saving.” No longer will it be a single objective goal.

Saving for “retirement” will contain multiple objectives, from saving for a second college degree to saving for a new business start-up to saving for more traditional retirement objectives. This needn’t be viewed as a demand to save more, though, since the second and third career option will generate income we previously expected to come from retirement vehicles.

Many fear the unknown of the future. I thrive in anticipation of “the coming thing.” I can’t wait to see what it turns out to be.

Better yet, I can’t wait to help create it.

Instant Insights /

Age longevity changes everything about retirement planning

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