June 08, 2013
Retirement, Money, And Rejuvenation Therapies
Low bond yields make retirement a dicey proposition.
Consider again the 65-year-old couple who are starting to draw down $1 million in savings this year: if they withdrew 3 percent, or $30,000, a year, rather than that standard rate of 4 percent, inflation-adjusted, there is still a one-in-three chance that they will outlive their money, under current market conditions.
Warning: this sort of projection is based on a business as usual (BAU) rate of progress in biomedical science. We are headed for a disruptive phase in development of biotechnology where we can begin to repair and replace aged tissue. Early stage rejuvenation therapies will arrive within the lifetimes of most people who are currently alive. But they will be expensive at first and not available as part of government-funded medical programs.
The nightmare: In some future decade you are 75 or 85 years old, your immune system is very weak, your joints are painful, and now one of your organs is failing. You have little money to live on. If you only had $250k you could get on an airplane and fly off to where you can get new one grown. In countries where a new medical treatment doesn't take 10 years to go thru regulatory processes replacement organs can be grown and lots of affluent people have them. But you are too poor to pay. Not a future I want.
Bottom line: If you want to guarantee your access to early stage rejuvenation therapies you need to save up and retain enough money to fund your own treatments. Prudent retirement planning should include planning for out-of-pocket payments for gene therapies, cell therapies, and growth of replacement organs.
Randall Parker, 2013 June 08 10:45 AM
If you want to guarantee your access to early stage rejuvenation therapies you need to save up and retain enough money to fund your own treatments. Prudent retirement planning should include planning for out-of-pocket payments for gene therapies, cell therapies, and growth of replacement organs.
Thats right. Those who are more technically oriented will want to plan for the possibility of fabricating these therapies in your own home lab. MEMS and microfluidics is going to make this kind of DIYbio a real possibility within the next 20 years.
Even if one is expecting life expectancy to freeze in place where it is, the average person at retirement is kind of nuts to keep their money in fixed interest or bonds. Where I am chances are at least one of a retiring couple will still be alive after a quarter of a century or more. My advice is to keep it all in shares. After a couple of business cycles it can be switched to something more conservative or one could leave it in shares and plan to leave a great deal to the beneficiaries of one's will if the stock market does well and still have plenty to live off if it doesn't do well.
it is best not to retire as long as one's mental faculties are intact, unless one is in a physically demanding job.
What counts is real bond yields, and they are not especially low. Ten year treasuries are now at 2.5%!
Better to have cash making 1% in a 2% inflation environment than cash yield 5% in an 8% inflation economy, even though your "income" is lower.
There is no economic difference between drawing down a little bit of your savings each year in the 2010s, and taking a high bond yield and letting 5-10% inflation erode your real savings value in the 1980's.
In reality, it is debtors who lack the means to refinance or who contractually barred from doing so who are suffering in the current economy. The smarter retirees bought long bonds before 2007 and are enjoying yields far in excess of inflation, and also have the option of sell their bonds far above par.
Low inflation strongly favors the elderly, and their whining their risk free savings accounts don't yield much is just greed by the best-off demographic in the USA.