Personal Finance Forecasts for Americans Over 50
What the future may hold in 5 years, 10 years and beyond
Next Avenue recently kicked off our weekly series of forecasts for Americans over 50 with predictions for the future of their health over the next five and 10 years — plus a Jetsons forecast beyond that. Now it’s my turn to do something similar for the personal finances of Americans over 50.
Over the next three Mondays in May, Next Avenue will showcase the outlook for these time periods in our other content areas: Living & Learning, Work & Purpose and Caregiving. All five stories are our way of celebrating the fifth anniversary of Next Avenue this month.
Two small caveats for this piece: First, when I interviewed futurists and other noted thinkers, I didn’t ask them to crystal ball what kind of currency Americans over 50 will be using in the years ahead. It’s impossible to say with much certainty whether bitcoin, prepaid cards or other recent technologies will explode or vanish. (And, frankly, the type of money isn’t as important as how much we’ll have and what we’ll do with it.) Second, no one knows exactly how the U.S. economy will fare going forward, and the finances of Americans over 50 are, of course, keenly tied to that. Pressing on…
In 5 Years: Rising Net Worth and Investing in Longevity
Over the next five years, Lawrence R. Samuel, author of Aging in America, expects to see boomers’ net worth continuing to grow “as they cash out of their careers and inherit parents’ assets.” (Some who’ll be in their early 50s are Gen X’ers.) During this time period, Samuel adds, people over 50 will increasingly consider alternative options for their third act of life, grounded in what Next Avenue blogger Chris Farrell calls “unretirement.”
Paul Irving, chairman of the Milken Institute Center for the Future of Aging, expects that in the next five years, Americans 50+ will increasingly look for investments that focus on enhancing the lives of older adults — mutual funds, ETFs and the like, in 401(k)s and Individual Retirement Accounts. This type of impact investing, he says, will “further expand awareness and capital access to drive growth in the longevity economy.” Incidentally, Irving predicts that investments capitalizing on changing age demographics will outperform the broader stock market.
In 10 Years: Traditional Retirement Fades
Ric Edelman, chairman and CEO of Edelman Financial Services in Fairfax, Va. and a popular personal-finance radio host, has been thinking a lot about Americans’ financial futures. In fact, the bestselling author just published a book on the subject: The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later.
Edelman thinks that in 10 years, retirement will be fading away. “Exponential technologies will produce advances in medicine and health care that will eliminate disease and slow or even reverse aging,” he says. “The result is that people will live well into their 100s and they’ll be healthier than they are today. So the notion of ‘retiring at 65 and dying at 95’ will disappear.”
Samuel notes that in 10 years, the emphasis in financial planning for people over 50 will shift from “wealth accumulation to wealth preservation.”
Our financial choices may be much different in 10 years because we'll live our lives differently than we do now. Edelman believes the linear lifeline (birth, school, work, retirement, death) will be replaced with the "cyclical" lifeline — birth, school, work, school, work, sabbatical, school, work, sabbatical, or some variation of this. Consequently, Edelman avers, “money will be saved to maintain lifestyle during school and sabbatical periods.” And as artificial intelligence and robotics “eliminate most current occupations,” he adds, some savings will be untouched for 60 or 80 years or more.
Such a fundamental change in the way we live will also make estate planning more complicated. Edelman expects that, as people live into their 100s, estate planning will morph into providing for seven generations in a family, or as he calls it “part of your financial plan for much later.’
Here’s the pleasant surprise for 2027 or so, according to Edelman: “Much of what we buy today will be free in the future” and other costs, like auto insurance, will disappear. “Self-driving cars will cut accident rates almost entirely, so there would be no need for insurance,” Edelman believes. “And manufacturers will own the liability, just like your phone manufacturer does now — if it breaks under warranty, they repair or replace it free.” (This could all happen in as early as five years, or as late as 20 years from now, he says.)
‘Jetsons’ Predictions: Healthtopias and New Types of Communities
For their Jetsons forecasts, Irving, Samuel and Edelman focused not on how much people will have, but where they’ll live.
Samuel predicts more affluent boomers will live in what he dubs “healthtopias.” These would be wellness-based communities for older Americans. While there, Samuels adds, they’ll transfer most of their $30 trillion in wealth to family members and charities.
Irving expects retirement communities will be reimagined as “engagement communities, enabling ongoing work, volunteering and encore careers, educational and cultural access and relationship development.” In Irving’s vision of the future for Americans 50+, “Young people will say to their grandparents: ‘I can’t wait to move here when I get old.’”
And Edelman floats this idea: a new emphasis on river and lake communities.
“Many of the population currently lives near an ocean, but real estate prices on the coasts far exceed that of the heartland,” he says. “As we move to vertical farming, the land in the Midwest will be converted to communities. And since people love living by the water, there will be a new focus on river and lake communities that offer advantages over oceans: no hurricanes, no salt water, yet great for fishing and water sports.”