Does The New Map of Life Mean a Retirement Crisis Is Coming?
In 2018, the Stanford Center on Longevity published a landmark report titled The New Map of Life. The report was developed from contributions, input, and data from scholars across disciplines, and it details the actions our society needs to take to prepare for 100-year-long average lifespans.
According to Stanford, 100-year-long lives will “become the norm for newborns born by 2050.” What’s more, 100-year lifespans are already in reach for about half of today’s 5-year-olds. But based on current support and infrastructure for aging populations, our society isn’t quite ready to handle this amazing breakthrough.
So what can we do to get there?
The New Map of Life: What Does It Mean?
The authors of the New Map of Life make it clear that we’re not currently ready to deal with the burdens of longer life expectancies — which, under current modes of thinking, is a problem that’s only compounded by rapidly decreasing birth rates.
However, the authors do take an optimistic approach to what this future means for all of humanity. They believe that with the right changes, 100-year-long lifespans can ultimately be a good thing for everyone.
To make sense of the changes that would need to take place for a successful transition into a world that includes longer life expectancies, the report covers nine domains that are all related to increasing longevity:
Early childhood
Education
Work
Financial security
Built environment
Climate
Healthy technology
Lifestyle and fitness
Intergenerational relationships
The changes they describe for each domain would result in a more fulfilling life for all members of our society, and at all stages of life. For example, the authors make the argument that investing more into early childcare now would pay off dividends for both the children who will live to be 100 years old and for their parents today.
For the purposes of our article, we’re going to focus on the changes needed in the role of work as well as how future 100-year-olds (also known as centenarians) will be able to build the financial security necessary to result in rich, fulfilling longer lifespans.
The Role of Work in a 100-Year Lifespan
A few months ago, we published an article about the possibility of the 60-year-career for those who will “enjoy” longer lifespans. The authors of the New Map of Life agree that a 60-year-career is likely a part of our children's, grandchildren’s, or great-grandchildren’s future.
Unsurprisingly, the thought of a 60-year-career is appealing to no one.
The New Map of Life does detail some innovative changes to the role of work in a 100-year-life, such as building in more support for working parents, lessening hourly workweek expectations, and even creating financial products that allow people to take sabbaticals or “gap years” from work at various stages throughout their lifetimes.
Unfortunately, we’re not so optimistic that our government and/or other institutions will prioritize these kinds of changes and policies before it’s too late. But we do have a solution so that individuals can take control of their financial security — without planning to work themselves into the ground over a 60-year-career.
Building Financial Security for a 100-Year Life
Building financial security for a 100-year life sounds positively daunting. But we think that instead of asking humans to add 20 years to their working lives — which are already prone to burnout, extreme stress, and over-exhaustion — we need to rethink our approach to investing and income security first.
For too long, hardworking people in the U.S. and all over the world have relied too heavily on equity investments (i.e., stocks, bonds, mutual funds) to build the financial security they need to retire. And unfortunately, relying solely on these types of assets for wealth accumulation is anything but secure.
Rising inflation, market volatility, and changing economies are just a few of the risks that can devastate someone’s carefully built life savings in a matter of weeks or months. These are things that no one person will ever have control over.
Since when did we get so comfortable leaving our life’s security up to so much chance?
This is why I believe that retirement planning strategies need to shift to income-replacement assets (also known as income-producing assets), such as real estate and equipment leasing, over or at least in addition to traditional growth assets like stocks and bonds.
How Income-Producing Assets Provide Security for Longer Lifespans
Income-producing investments don’t just appreciate over time. They produce reliable income on a monthly, quarterly, or annual basis in addition to appreciation. Depending on the type of investment, this is accomplished through rental payments, lease payments, or interest earned from lent money.
With proper income-replacement investments, you can replace one-third of your current income for every 10 years of self-directed investing, conservatively. In fact, some of our clients have been successful in replacing all of their income within just 10 days of investing! It is possible. And you don’t have to be fabulously wealthy to get started.
The New Map of Life tells you to plan for a retirement that is 40 years instead of the 10 or 20 years your grandparents had. You’re also going to be healthier than they were and stay mentally acute for a much longer period of time than they were. This means that you’re going to need more money to spend for a retirement lifestyle that’s going to last a lot longer.
Open a Self-Directed IRA to Start Investing Your Retirement Savings in Income-Producing Assets
Anyone can invest in real estate or other alternative assets with after-tax savings. But to invest in these assets and take advantage of the tax savings that come from contributing to an IRA, 401(k), or other retirement savings plan, you need to open a self-directed IRA.
A self-directed IRA is a type of retirement account that allows you to invest in the assets you want to invest in — you’re not limited to investing in the stock markets. However, the IRS still has strict rules that regulate the investments you can hold in any IRA, so you’re required to open a self-directed IRA under a custodian who will make sure you’re adhering to these rules.
At Chicago Trust Administration Services, we’ve been helping clients self-direct their futures for over 17 years. To see how we can help you start investing in income-producing assets with the potential to build more security for a longer lifespan, we invite you to schedule a complimentary meeting with us by calling 312-869-9394 or emailing steve@ctasira.com.
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*The content and opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
**CTAS professionals are not financial advisors and cannot provide advice or recommendations regarding specific investment decisions.