In my recent post about how much you need to save for retirement, I pointed out many of the specific uncertainties relating to retirement planning, especially for people with a long time to go until they hit retirement age. These include:

  • What retirement costs will be (accommodation; care; costs involved with the activities you want to pursue, whatever you’re interested in at that stage of your life)
  • What your health status will be
  • Whether you’ll be entitled to superannuation and how much it will be
  • What your investments will return.

To which, I would add a number of broader-level, pie-in-the-sky uncertainties relating to technology and its effect on the economy and society in general.

The truth is, the world we live in is different to the world we lived in twenty years ago. Twenty years ago, the internet had not caught on widely (in my first year at university, we were only able to visit websites with .co.nz domains and I was only just starting to hear about Google; before that, I was logging into BBS systems with a 2400 BPS modem, if that means anything to you). Twenty years ago, cellphone were barely a thing, let alone internet-connected smartphones with colour screens and cameras on them.

There are many radical technologies around the corner that could have a profound impact on the world as we know it. Consider:

  • Renewable energy and efficient storage sources for this energy;
  • Driverless cars;
  • Artificial Intelligence (AI), in whatever form(s) it takes – narrow AI is already here; a hand calculator is a narrow form of AI that is far better at humans than calculating the square root of numbers; all we are seeing is the expansion of AI to broader applications, which have more potential for disrupting industries and the economy in genearl;
  • Immersive virtual reality;
  • The internet of things; and
  • 3D printing.

To get even more radical, consider the potential impact of:

  • Lab-cultured meat;
  • Mars colonisation;
  • Cryonics;
  • Life extension;
  • Public policy innovations, which could include new forms of political governance (influenced by technologies), or universal basic income; and
  • Designer viruses.

Any one of these things could have a profound impact on society. A combination of these things could render the world almost unrecognisable to what we’re used to today.

This shouldn’t stop us from planning for retirement.

But it should make it clear that the future is inherently uncertain. Long-term planning requires an appreciation for these uncertainties. It means that our objectives may need to change over time. This thought experiment also makes it clear that we need to put a premium on flexibility and an ability to adapt to change with respect to any of our long-term endeavours. 

Sonnie Bailey

Sonnie is an Authorised Financial Adviser (AFA) and former lawyer with experience in the financial services and trustee industries. Sonnie operates Fairhaven Wealth (www.fairhavenwealth.co.nz).