Extended Life Spans and Financial Planning
I've written here before on the topic of financial planning for the future in the context of plausible advances in healthy life extension science. A batch of other folks have been mulling that and related topics of late, it seems.
Kyle Markley uses Aubrey de Grey's life span goals to argue that Social Security is nonsense:
The real problem with Social Security is that it's utter nonsense. How can I say that? Because the fundamental assumptions underlying the system are false.Dr. Aubrey de Grey, biogerontologist at the University of Cambridge, believes that the first person to live to the age of 1,000 is already alive today - and is already 45 years old! Dr. de Grey argues that aging is a curable affliction and that extended lifespans would be filled with healthy, productive years - not centuries of frailty. Please visit his SENS website for more information.
Social Security's fundamental assumptions are that people will retire, and that retirement will be short and ended by death. An individual will contribute into the system for approximately 45 years, and collect benefits for about 15 years. (background on these figures)
It is obviously ridiculous for a person who lives to be 1,000 to spend less than 5% of those years contributing to Social Security, then retire and spend more than 95% of their lives collecting benefits. It could not work. It would be a society of parasites with too few victims to sustain itself. The same observation applies to any other system where benefits begin at a certain age and terminate at death: The time spent collecting benefits will balloon beyond all prior expectations. No, your 401(k) doesn't make much sense, either - forcing withdrawals when you're less than 100 is plainly silly when you'll live ten times that long!
Frankly, the social security system makes very little sense right now - it's a pyramid scheme that enriches people who are, on average, far better off than those who are paying.
Michael Friedman has a few comments on the subject too.
It might be a good idea to invest in an annuity now before insurance companies adjust to this new reality. Of course if the changes are too severe you may not be able to collect - your insurance company may go bust. If you pick one with a strong life insurance business you may be all right though.From a stock point of view, consider adjusting your portfolio away from companies with exposure to defined benefit pension plans for younger workers - they may end up paying out far more than they plan. Also avoid companies that sell annuities. On the other hand, life insurance companies may do very well.
Change is certainly in the air.
Needless to say, entitlement programs such as social security will go bankrupt with vastly extended lifespans. The intent of these programs was to take care of old people bacause they are old and that the aging process makes them dependent. If we cure aging an remain young, then the orininal purpose of social security is no longer applicable or valid. The program should be shutdown.
The reality is that anti-aging breakthroughs will come over a period of time. Many people (maybe most, all, or none) will not survive to the time that universal anti-aging is available. The people who are currently old certainly will not make it and they need the program anyways.
I believe that Aubry de grey's SENS project is the right approach and that it will be successful. The timing is the open question.
I believe that as anti-aging breakthroughs are developed and commercialized, that the social security system should be phased out over a period of time consistant with the development and availibility of an effective cure for aging. Based on current rates of development in biotechnology, it is reasonable to assume a 30 year period for the development of a cure for aging and for the gradual phase-out of the social security system.
Other countries will phase out their national pension schemes during the same time period.
The above proposal seems so obvious to me such that it should be tacitly understood that this is the problem is self-solving in the above manner.
Given this, I honestly do not understand all of the hand-wringing over the advent of immortality and the effect on national pention schemes.