The retirement outlook grows better by the day. That’s because we’re living much longer right as wealth inequality is poised to skyrocket. It’s a brilliant combination.
For background, Wall Street Journal retirement columnist Clare Ansberry recently reported that “the number of Americans who are turning 80 or older close to 15 million.” Better yet, Ansberry adds that the number within the 80+ cohort is expected to double within two decades.
Is it any wonder, as people live longer, that retirement becomes a great deal more gilded? It shouldn’t when it’s remembered how much compounding factors into wealth growth.
Which requires a look backwards. Ansberry adds that “Getting this old is a relatively new phenomenon. In the past, people retired in their 60s and lived a few years longer. Only outliers made it eight decades.” Consider the meaning of all this.
It’s not just that people are living longer, it’s that the number of Americans living longer while working can only grow. Think AI and other advances. They won’t put us out of work as much as they’ll free us from work we frequently dislike, and in ways that allow a growing number of us to specialize even more on the job. The benefits of this will be many, and will surely elevate retirement.
For one, AI promises better working conditions (again, it will spare humans some of the worst aspects of any job they do) that will elongate our working lives. The more and longer we work, the more we’ll be able to save while compounding savings.
For two, what replaces human effort renders those same humans quite a bit more valuable. Precisely because AI will spare us work that we don’t like, that slowed us down, or both, the work we will do will be that much more valuable. Which means longer living Americans will work longer and more productively, with both elevating retirement even more.
Then there’s presumably the lucrative science of living longer. One can assume to the extent that medicine and other scientific advances make it possible for Americans to live longer and healthier, the creators of those advances will elongate life while growing very rich in the process. This means that as old people live and work longer all the while saving some of their gains, they’ll also see their savings compound at higher rates precisely due to the advances that are causing them to live and work longer.
It can’t be said enough that wealth creation lifts retirement like nothing else, and for obvious reasons. The growing tendency of savers to expose a little or a lot of their wealth to index funds means that they’re always capturing a portion of the gains of some of the biggest innovators.
It all speaks to what will be the biggest source of gilded retirement outcomes: soaring inequality in general. As each day passes, the ability of visionaries to reach a growing number of people in a rising number of ways with their genius increases, and with it so does inequality increase.
Crucially, none of this is a negative. How could that which substantially increases investment returns in retirement accounts be a negative?
The answer is that it’s not. Soaring inequality is undeniably positive as a sign that the lifestyle gap between rich and poor is rapidly shrinking, but also as a sign that older people, retirees and both are seeing their wealth soar as individuals become wealth unequal by lifting living, working and health standards in ways no one ever imagined.
