How Much Do You Need for Retirement If You're Going to Live a Very, Very Long Time?

Yet another article on the average Americans' dearth of retirement funds informs us that: 1) "Household heads aged 55 to 64 have typical retirement-account savings of just $64,000." (This from the WSJ, emphasis in the original.) (Oh my God, that's completely pathetic! -ed.) 2) If you count the possibility of long-term nursing home care, and think you can live on $40,000 a year in retirement (I know I can't. -ed.), a couple may "need" $2.6 million to retire.

But... longevity is increasing rapidly. These sorts of retirement calculations are based on average life expectancy. So before we even get to increased longevity, the person who is even bothering to read these articles on retirement has a greater average lifespan, because they're more educated, education is a proxy for IQ, and more intelligent people live longer. (Fewer accidents, take care of themselves better, etc.)

What happens as we approach Strategies for Engineered Negligible Senescence, and beyond that, The Singularity? I think the short answer is that, at first you'll need a lot more money, and later not so much.

First of all, when SENS gets going, it will not be cheap. Intelligent people have already made the lifestyle changes necessary to add years to their lives, so when SENS comes along, they'll want to have it. Even now, clinics that specialize in hormone treatments with growth hormone and testosterone and the like can cost up to $10,000 a year or more, and the clinics are growing. Plenty of customers available who will spend that kind of money. SENS will likely cost a lot more in the beginning. And if you're chugging along on a Social Security check you won't be able to afford it. What this means is that not too far into the future, having an adequate amount saved for retirement can literally mean the difference between life and death.

Think about that: you don't want to max out your 401k because you need to take too many trips to Starbucks and your cell phone bill is too high. In that case, depending on your present age, you can probably expect to die a lot younger than your peers who have made wiser choices.

How much do you need? That is, of course, unknown: we don't know when (skeptics will say if) SENS will come into being or what it will cost when it arrives. Since current state-of-the-art longevity treatment might be around $10,000 annually, let's just double that to figure what SENS will cost. This is one case where you definitely want to be an "early adopter". Prices will fall later, but if you're, say, in your fifties, you'll want to have every advantage. Those currently in their sixties or older are probably not going to be make it long enough for SENS.

Most retirement plans estimate that a rate of withdrawal of 4% will pretty much keep you in clover for a good long time. That assumes a real rate of return of 7 to 8% on your money. (If you're a great stockpicker, adjust accordingly.) But what if you're planning to live to 200? 1000? You just may want to max out that 401k after all, and don't forget the Roth IRA either.

Say you want to live on $60,000 a year in retirement, but then figure that SENS will come along and want to have another 20 grand to spend on that. At the 4% withdrawal rate, you'll need $2 million. But you'll likely want more, as insurance. You'll have to weather market downdrafts and the possibility of living to be as old as Methuselah.

Much of this could be moot as we get into, say, the 30s and 40s of this century, for if Kurzweil is even half-correct, the singularity will be approaching, productivity will be increasing without limit, and those with money invested ought to do very well.