Retirement strategies would need to radically evolve to keep up with changes in society.
"Retirement is expensive and will become even more expensive in the future," said Jean-Claude Menard, chief actuary of the Office of the Superintendent of Financial Institutions in Canada, at the Society of Actuaries' symposium Living to 100 in January. "No matter if it is a fully funded plan or a pay-as-you-go plan, no matter if it is a defined-benefit or a defined-contribution solution, no matter if it is a national public scheme or a private pension plan, the fact is that increased longevity will continue to put pressure on the financing of pension plans."
Corporate pensions and government entitlement programs -- Social Security and Medicare -- would likely be stressed beyond their capability.
On top of the strain already felt in budgets for Social Security and Medicare, research shows that their funding gaps will increase along with the average age of beneficiaries.
A study by the MacArthur Research Network on an Aging Society found that by 2050 Americans may live 3.1 to 7.9 years longer than official government projections, resulting in sharply higher costs for government programs that serve older citizens. The study estimates that cumulative outlays for Medicare and Social Security could rise by $3.2 trillion to $8.3 trillion from current government projections by 2050.
"Even small changes in life expectancy produce large changes in the number of older Americans," said Dr. S. Jay Olshansky, a professor at the University of Illinois at Chicago's School of Public Health and one of the authors of the study. "Therefore, our projections of longer life expectancy have profound implications for America's fiscal situation, health care system and labor markets."
"Although the nation will become increasingly gray in subsequent decades, the United States is not well prepared to deal with the myriad consequences of this impending reality," said Dr. John Rowe, who chairs the MacArthur Research Network and is former CEO of Aetna.
With the ability to age like Methuselah, a massively longer time horizon for retirement savings might ease some of the concerns for investors.
If a preretiree were to add just an additional $1,000 a year to an initial 10,000 in a 401(k) or IRA (assuming a 5% compounding return), they will amass roughly $4 million over the course of a century. Saving or investing for 150 years would see that total rise to $6.7 million within 150 years and $536 million after 200 years.
The longer they live, the better the news: That mere $1,000 a year would accrue $6.1 billion over 250 years. By the time they reach 800 to 1,000 years old, they will hypothetically have trillions at their disposal.
Those science fiction-level returns may be of little consolation to a society on the cusp of making 100 years old the new norm.
A recent study by SunAmerica Financial Group and Age Wave, a research and consulting firm focused on population aging, found that 67% of respondents say they would like to live to 100. Among the advantages of living to 100 they cited were "remaining productive, establishing deep relationships with family, witnessing new discoveries and experiencing many years of leisure."
Jana Greer, president and CEO of SunAmerica Retirement Markets and senior vice president of SunAmerica Inc., says many Americans are postponing retirement because they have the health and willingness to work later into life. While 10 years ago most were planning to retire at about age 64 or 65, today's workers have moved that target up to 69. She refers to the trend as "Retirement 3.0."
"You might think they are delaying it simply because of the challenges obviously of the recession and the impact that has had on their financial condition," Greer says. "Actually, we are finding that people want to stay engaged. Not only are they working full-time longer, but one of the huge findings out of the study was that retirement doesn't mean 'retirement' any more. It doesn't mean the end of work. About two-thirds of the people in the study -- both preretirees and retirees -- want to stay working in some way during their retirement, whether it is part-time or flexible, coming in and out of the workforce."