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Comment by illumin8 | Hacker News Reader

1. You should not be 100% invested in stocks during retirement (or ever). Diversified portfolios that contain stocks, bonds, cash, and inflation protected assets (such as gold or real-estate) are highly recommended.

2. See #1. Diversification is the way to reduce the risk of stock market crashes, while still getting high annual returns. Diversied portfolios such as the Permanent Portfolio have averaged 9.3% CAGR over the last 40+ years.

3. Average lifespan in developed countries is still increasing dramatically. It might be ~80 years now, but kids just entering the workforce could easily live 100+ years. You better plan for it, unless you want to work right up until the day you die.

4. Agreed.

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> kids just entering the workforce could easily live 100+ years

Actually, the average lifespan at 65, i.e. how long can you expect to live given that you've reached 65, has seen a much less dramatic change than life expectancy at birth (often called just "life expectancy"). In 1845 it was 75 years, today it's 82 (data for the UK [1]). Since people who die before 65 don't get any retirement, this is the key figure.

Looking at the graph in that source, life expectancy at 65 has been increasing roughly linearly since ~1900, with a trend around 0.7 years per decade. This means that kids entering the workforce today who survive to 65 can expect to live about four years longer than people entering retirement today.

Given that retirement age is now steadily increasing, it's not likely that people will have significantly longer retirements even in 2050. Four years of increase in retirement age from now until 2050 is highly likely IMO.

Edit: forgot source link:

[1] https://ourworldindata.org/life-expectancy/

Life expectancy is reported at a 50th percentile, right? Is there any site that shows a 90th percentile?

Aren't life expectancy numbers at birth inherently flawed because they assume the status quo for 70+ years? I don't think there are any medical breakthroughs around the corner that will dramatically increase the lifespan of someone who is currently 65, but are you willing to bet that won't happen for someone who is born today?

Yes, these numbers are back-calculated as you say (anything else would be witchcraft). And as you say, there could suddenly be a breakthrough technology in twenty years that massively increases life expectancy.

But IMO this is very unlikely, because people die of such wildly varying causes (including lifestyle-induced diseases, accidents and even suicide) that it's hard to imagine what this sudden change could be.

More likely we will keep seeing incremental change, disease by disease, steadily increasing average lifetimes.

Biology and biochemistry is so bloody hard compared to any human tech, it's amazing we have come as far as we have today. People talk about curing cancer like going to the moon, just throw money at it, but that analogy is only accurate if you assume starting your space program sometime around 1870.

Saying that an investment strategy has averaged positive returns over 40+ years may be true, but is not necessarily useful information. Over very long periods of time, there are many strategies that will provide an average positive return. In this context (retirement spending), investors have to weigh long-term growth with the need to withdraw money from the portfolio every year to live on. Volatility is thus an important consideration.

> Diversied portfolios such as the Permanent Portfolio have averaged 9.3% CAGR over the last 40+ years.

Past performance is no guarantee of future results.

But they sure are comforting.

Past results guarantee future results in the same circumstances. Over time, circumstances change which invalidates their value. But, in the short term, they imply a probability of future results based off of the volatility of the circumstance state.

Negative interest rates, slowing growth, models based on historical returns we'll never see again.

Not comforting at all.

Got another option?

I don't. That's why I'm worried. One of two things will happen:

1. Technology innovation velocity will increase, with the results distributed through society, driving down the cost of living (this is already happening with almost everything except real estate, healthcare, and education [1]). You won't need to invest, because it'll cost nothing to exist (let's call this "Star Trek Future").

2. Technology innovation velocity will increase, but it'll be locked up with copyright, patents, etc. Rent seeking will drive more of the population into serfdom. You will not have a pleasant life, nor will it be long (we'll call this "Elysium Future").

[1] https://www.washingtonpost.com/news/wonk/wp/2016/08/17/the-s...

I think I can tell you which of those is most likely.

I've got a child, I have to push hard for option #1, by any means necessary.

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