What Does Retirement Mean When Aging May Soon Be a Thing of the Past? Longer average life expectancy mean it's time to redefine what comes after we stop working.
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Jerry Lojacono, 56, is still far too young to put an end to his career. An independent consultant, he teaches salespeople, primarily in the biotech industry, how to do their jobs more effectively. Fifty to 70 percent of his time is spent crisscrossing the U.S., Canada and Europe.
He loves it all: "I'm never going to stop doing what I'm doing," he says. "It's more of a passion than work." Still, Lojacono does want to eventually be in a place where his decision to take on new consulting gigs is unmotivated by finances. "I'm not there yet," he says although he hopes to be by 65.
By that age, Lojacono --given his moderate lifestyle and his intent to continue some consulting work -- estimates he will need to amass a portfolio of over $2 million to live comfortably in retirement, which he defines as more time with his wife, Rosemary, and more time for travel and nice meals.
It will also mean many more years to experience those perks than previous generations enjoyed. Today, the average U.S. man's lifespan is 81.4 years. And Lojacono, given his healthy lifestyle and access to the best healthcare in the world, will probably live much longer than that.
Yet while the new longevity Americans now savor seems to offer nothing but an upside -- you're cheating death longer, right? -- the downside of retirement, if it can be called that, is the absolute need to do more planning and budget in many more expenditures.
And that's just for starters, because no one knows how long "longevity" will eventually extend, given the scientific world's ongoing research into stem cells. With stem cells, engineered tissues and organs may someday replace our disintegrating originals. "You could get an "oil change,' an upgrade to your cells every few years," predicts Michael May, chief executive of the Center for Commercialization of Regenerative Medicine, in Toronto. "If, 20 or 30 years into the future, your heart is defective, maybe you can grow a new heart in a dish. The underlying biology and access to cells is getting there."
But back to Lojacono, who seems a veritable poster boy of the longevity trend for healthy, well-heeled Americans now in their 50s and 60s. In fact, Lojacono's retirement outlook seems bright: On top of his four investment properties in New York, his plan to continue consulting will produce at least a small stream of ongoing income. And by retirement he and Rosemary will have discharged their parental responsibilities as regards college for their three daughters, now ages 14, 17, and 18.
'I don't know how much time I have, but I'm going to live abundantly while I'm still healthy. I try not to put a number on it.'
In fact, Lojacono estimates that as people with a relatively modest lifestyle, he and Rosemary will be be able to live comfortably on $75,000 a year. Since a 5 percent return on that $2 million nest egg they expect to amass will translate to $100,000 a year, theoretically the couple should be financially fixed to live a long time -- and still leave a generous inheritance for their daughters.
Nor will they need to rely on those daughters for financial support at an advanced old age: "I don't want my own irresponsibility to rear its ugly head when I could have taken care of it earlier," Jerry says.
Right now, that time seems far off. Although his own father died from heart complications at 71, his mother is 86 and going strong. "She could easily live another 10 independent years," he says. "I don't know how much time I have, but I'm going to live abundantly while I'm still healthy. I try not to put a number on it."
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It's hard for anyone to put a number on it. Depending on whom you talk to, those estimated ages of longevity -- again, 81.4 years for men and 84.3 for women, according to 2011 actuarial tables -- may be just so much hokum.
For both genders, factors like a college education, regular exercise, a healthy weight, marriage, a household income of more than $80,000 and a lifestyle that includes moderate drinking but no smoking all improve life expectancy. If you are a 60-year-old American who lives that profile, you can expect to live well into your 90s, some experts say.
And even that projection may be low. Jane Williams is the chair of Sand Hill Global Advisors, a San Francisco-based wealth management firm, who specializes in retirement planning. She doesn't use actuarial tables when she helps clients prepare for retirement, because she finds their projections unrealistically truncated. "Life expectancy extends the longer you live," she says.
In other words, for each year you remain on this earth, your chance of beating the average life expectancy for your demographic trends upwards. "If you are 50, you might have a theoretical life expectancy of 84, but as soon as you make it up to 60, you'll likely to live to 87, maybe 89," Williams says.
"If you make it up to 65, maybe it's 92."
Because Williams' clients are uniformly well off -- with an average net worth hovering around the $10 million mark -- they will have access to the most high-end, cutting-edge medical care, she points out. And as the science of human longevity continues to accelerate, this will likely translate into improved life expectancy across the board.
Of course there are still cancer and heart disease to contend with. A Centers for Disease Control statistic shows that men have a 30 percent chance of dying between the ages of 50 and 75. "A third of that is from cancer and a third is from heart disease," says geneticist and entrepreneur Craig Venter.
What if we could reverse aging? According to Church, 'That's already happening.'
Venter, as founder of Human Longevity, a San Diego-based company dedicated to extending life expectancy and improving quality of life, says his (not immodest) goal is to vastly reduce, if not eradicate, both major killers. The key, he says, is genome sequencing, which already allows for the detection of "diseases at early stages so they can be treated and even prevented."
In March, Human Longevity raised $70 million, in part to collect a large cache of DNA data. The objective is to parse the data for clues on what causes cancer and heart disease to "assess someone's true state of health." This rests on the ability to detect illness as it arises rather than when it becomes symptomatic.
A cure for aging?
Heart disease, cancer and other terminal illnesses can all be traced back to the natural wear and tear that comes with living. As we age, our bodies break down: Tissues and organs become defective and the likelihood increases that our cells will fail us.
"Ninety percent of us will die of diseases that do not kill 20-year-olds," says George Church, a professor of genetics at Harvard Medical School. Advances in medicine -- which over the past century raised the average lifespan in the United States from 47 to 77 -- simply delay the inevitable certainty that we will grow old and, eventually, die.
But what if we could reverse aging? According to Church, "That's already happening." Remember those stem cells? Other body parts are figuring into the mix, too.
To be clear, Church is talking about mice. Still, the research is compelling: In a 2014 study, researchers found that exposing older rodents to blood from their younger, fresher counterparts actually counteracted and even reversed signs of age-related cognitive impairments. Soon, similar trials will involve humans, Church predicts. "The barrier of entry isn't that much," he says.
Such experiments, along with advancements in regenerative medicine, stem cell therapy and gene editing, mean that in a hazy but potentially not-too-distant future, we will no longer die from natural causes. Death, in other words, will be relegated to the realms outside age and disease. (For the record, Google is also working to make this far-out prediction a reality with Calico, its new division devoted entirely to combating aging and disease.)
Then there is May, in Toronto, with his stem cells. The Canadian researcher is careful to stipulate that the concept of long-term longevity is merely a projection. "Right now, it's science fiction," he acknowledges.
Planning for a long future
Jane Williams, the San Francisco retirement specialist, is 57 years old. According to the actuarial table for women her age, she can expect to live for another 27 years. But in her mind, that's too conservative an estimation.
"I always thought of myself living to 100, easy. I am healthy and strong and I have good genes," she says. "Besides, my orientation is to believe people are going to live longer than they think they will."
This philosophy informs how Williams prepares her clients for retirement, both financially and emotionally. She relates a conversation she recently had with a woman in her late 50s who wanted to stop working immediately because she had accumulated $1 million. The consultant understood the woman's motivation: "She's tired of what she's doing, she's tired of her life and she wants to stop working,"
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But, full-blown retirement? The consultant was skeptical. Without an income, "she can't support herself in Palo Alto, [Calif.] that's for damn sure," Williams says she told her.
Besides, there are emotional reasons for someone with 30-plus healthy years ahead to keep working. "Do you want to cut off your productivity?" Williams asks rhetorically. "Continuing to work not only adds financial security, it provides a connection. It helps you remain engaged in life."
In fact, as life expectancy expands and more people remain physically and mentally capable long into their older years, it's time to redefine retirement, says Chris Carosa, an investment advisor and the author of Hey! What's My Number? How to Improve the Odds You Will Retire in Comfort.
In lieu of the traditional interpretation, of trading in a joyless job for lazy days on the beach, Carosa recommends a more active approach. "Retirement should be a point in your life where you are pursuing passions rather than figuring out how to put bread on the table," he says.
To start, he advises, identify activities you enjoy beyond their ability to pay the bills. Your job might be one of them. Carosa recommends coming up with two or three such options early on -- "when you are [still] in the meat of your career."
Think: writing, coaching, photography, he says. At 60, 50, even 40, "You should be considering, "What do I envision myself doing when I'm 65, 70, so I don't have to be dependent on the current job market?'"
And here, millennials may already be ahead of their elders. Yes, they may forgo higher salaries and more stable careers initially, but in the long run their drive to find an occupation that satisfies on a deeper level than just the financial one may be their trump card. As Carosa points out, if you love what you do, continuing to do it into your older years isn't a chore.
Venter, the geneticist who's now 69, puts it even more bluntly. "I think," he says, "retirement is overrated."
Working far into the "golden' years
Church, the genetics professor, who's now 61, says he plans to work until he dies. "Part of aging is retiring," he says. "It has negative consequences on your fortuity -- taking it easy is bad."
Carosa, 55, is a member of the same club. Though in a financial position to retire in the traditional sense, he continues to do what he loves because it engages him intellectually and provides an ongoing income. It's also, well comfortable: Carosa works at home, conducting his consulting business from his hometown of Rochester, N.Y.
Describing his lifestyle, he says he's attained a happy medium between the hustle of early adulthood and the aimless days of traditional retirement. He also enjoys a flexible schedule and the freedom to pursue other interests -- like playwriting. (His inaugural effort, titled the Macaroni Kid, about a tone-deaf young adult with a passion for singing, was recently performed for friends and family.)
This is the "aging" model Williams recommends for clients: treating retirement not as an abrupt life change but a series of gradual alterations. If those alterations result in a paycheck, all the better -- her clients can feel confident that they won't be strapped for cash.
Investing in the future
The final piece to longer life spans, of course, is planning for them. Retirees should simultaneously be more aggressive in their investments and more conservative in their spending, Williams says.
In the past, retirees could generate a predictable income and consistent returns by investing heavily in bonds. But that's no longer a safe strategy, thanks to historically low interest rates which "have been on the floor for nine years," as the consultant puts it.
"Bonds are returning nothing," agrees Tara Carlson, a wealth strategist for Waddell & Associates, an investment and asset management firm with offices in Nashville and Memphis. Retirees' ability to support themselves on growth assets from bonds alone has evaporated, she says: "It's gone."
It's true that interest rates won't remain at their rock-bottom lows forever. In December, for the first time in nearly a decade, the Fed raised interest rates from a range of 0 percent to 0.25 percent to a range of 0.25 percent to 0.5 percent. In spite of this tepid increase, however, "in our opinion, interest rates will remain low for a very long time," Williams says.
That means retirees need to be more aggressive about their portfolios. If you are 65, you need long-term investments. While a healthy portfolio for that age group has traditionally consisted primarily of bonds, that composition is shifting.
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Depending on an individual's or couple's age and assets, Carlson recommends investing 40 to 70 percent of their retirement portfolio in equities, a higher risk, but potentially higher-return, investment. "They have time to recoup their losses," Carlson points out, referencing that factor of higher longevity once again.
On the flip side, longevity also, unfortunately, calls for increased caution in spending. "Parents, by and large, absolutely do not want to call their kids and say, "I need your help,'" Williams says. So, she says she tells clients to be more conservative in their giving -- finding the balance between enjoying their assets with those they love but not overextending their budgets to the point where a few, unexpected (and welcome) extra years of life becomes a financial burden.
'Would you like your last dollar to be passing through your fingers as you say goodbye to the world?'
The more years you expect to live without working, the tighter the parameters. Previous generations could reasonably spend between 3 and 4 percent of their net assets (which includes all investments besides one's primary residence) per year to maintain financial stability. But today, by Williams' estimation, the spending cap is closer to 2.5 to 3 percent for individuals in their 60s. (She stipulates that this is a "very general" rule of thumb.)
Historically, a balanced retirement portfolio could easily average an 8 percent return per year, but, "That's no longer achievable, unless you are a real risk investor," says Williams, who suggests that clients not count on more than a 6 percent return rate.
From that 6 percent, she advises, retirees should scrape off an additional 2.8 percent "to offset vestiges or the ravages of inflation," plus up to an additional percentage point's worth of cash to cover capital-gains tax expenses.
A rainy-day fund, after all, never goes out of style.
A long, happy life
Finally, while it may sound extreme, the only responsible approach, some retirement experts argue, is a plan in which retirees never run out of money. And that means that they're essentially living on their interest and portfolio returns plus social security.
Again, plan to live longer than you expect to, Williams says. After all, the anecdotal evidence out there supports it.
"Would you like your last dollar to be passing through your fingers as you say goodbye to the world?" she asks. "We rarely die on time."