What Will Retirement Be Like for Gens X and Y?

SmartMoney

If you're between your 20s and 40s today, you'll likely live to be 100.

This probably conjures up happy thoughts of dancing at your great-granddaughter's wedding or going for a light jog in the park at age 85. But there's a dark side to this scenario: How does one fund a retirement that could span 40 or more years? Most talk today centers on baby boomers and their preparedness for retirement. But what about the folks who come after the baby boomers: Generation X, born between 1964 and 1980, and Generation Y, born between 1980 and 2000?

     
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Should the Social Security and Medicare systems remain unchanged, Gens X and Y will have the baby boomers to thank when there's nothing left in those coffers for themselves. On the flip side, thanks to medical advances and technological innovations, these generations will likely have a more active and healthy retirement than even the generation before them. Living to 100 might mean they'll one day sleep in beds that track their vitals or have robots that do their "dirty" work as they pursue jobs they truly enjoy.

To find out what the future might look like, we turned to so-called futurists. Futurists study today's social, demographic and technological trends and assess how they will affect folks in the future. Despite the hokey name, many are business professors or full-time consultants, advising large corporations on new trends and future developments. Here's what they told us retirement will look like for today's younger generations:

Challenging Starts

The youngest members of Gen X — today's college grads — are entering their adult lives with some trends working against them.

They kick off their financial lives more than $20,000 in debt. Despite soaring college costs — a 28% and 38% increase for private and public colleges, respectively, over the past 10 years — average annual earnings have barely budged. (Men with a Bachelor's degree today earn only 5.45% more than they did 10 years ago; women: 10.4%.)

Meanwhile, pensions are disappearing. Today's young employees are expected to invest in 401(k)s, while carrying entitlement programs like Social Security that benefit their parents. "In addition to shouldering our own burden as a generation — which is heavier than that of our parents — we're expected to shoulder the burden of our parents as well," says Patrick Tucker, a Gen X-er and associate editor of The Futurist, the magazine of the World Future Society.

The 80-Year Career

Having a greater obligation to fund retirement on one's own — plus living longer — means people will pursue second, even third careers. "When you start to extend life that far, the concept of re-careering is going to become prominent," says Michael Zey, a business professor at Montclair State University and author of the book "Ageless Nation" (coming out this summer). "The college-training-career-retirement model is going to go away and you'll start to see training, career, maybe a hiatus and then retraining, and moving into a different career."

Glen Hiemstra, a futurist and author of the book "Turning the Future into Revenue," goes as far as suggesting a national policy on midlife sabbatical that gives people in their 50s several years off from work: a time "to figure out what to do with the rest of your life," he explains.

And Gio Van Remortel, a futurist with Social Technologies, predicts an increasing reliance on entrepreneurship — running a small business from your home, for example — while pursuing one's "regular" career. "Thirty years from now, people are going to be looking for creative ways to make money off the payroll scales," she says. Why? To support expensive lifestyles they'll have. Those little luxuries that Generations X and Y are growing up with will be hard to shake off, she says. This includes the "maintenance" of bodies that will live longer and longer: Plastic surgery isn't getting cheaper, and Van Remortel predicts it'll be as common in the future as facial cream is today.

Future "retirees" will head back to school — not just to keep up with new skills and technological advancements, but to pursue their passions as well, says Dan Vito, a senior vice president at Age Wave, a consulting firm that specializes in aging and retirement issues. That could be learning Italian in your 60s or taking a paragliding class, but it could also be going back to school to refresh your computer skills so you can start your own business. "If you're a Gen X-er or Y-er, you should plan on living a long time and creating a retirement plan that's not just financially-based, but also passion-based," Vito says.

A Technological Boost

If all this seems rather gloomy, it's worth noting that technological advances will likely offer amazing perks that make the whole living longer and working harder proposition more appetizing. Our futurists point to two areas:


Cheaper Health Care Through Smart Homes
Information technology will move out of computers and PDAs and into our bedrooms, bathrooms and kitchens. By 2020, our beds will read our heart rate and blood pressure as we wake up, predicts Tucker. The bathroom mirror will tell us how the nutrient levels in our bodies have changed over the past month. Biosensors embedded in our clothes will monitor our caloric intake. Sound far-fetched? The good news? All this could not only help us live longer, it could help lower health-care costs as individuals take better care of themselves, Tucker says.

Better Work Life Through Artificial Intelligence
To many, artificial intelligence may sound like "something that involves humanoid machines that carry guns and possibly run for governor of California," Tucker says. But really, it's no joke. "Computer intelligence is going to vastly exceed human intelligence by 2040," he says. "That means, conceivably, that computers will be able to interact with humans in a way that's indistinguishable from a human." In other words, robots will be able to do manual labor or tasks we don't enjoy, whereas humans can focus on the fun stuff. "That points to a very bright future for young people today," Tucker says.

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