Retirement is a rapidly approaching reality, and its transforming future is becoming increasingly visible with technological advancement. For one, people are living longer and need to save more. And well, looks like the ‘golden years’ are now painted with a bit of silver lining, as 58% of Americans plan to work in retirement. Life is also becoming “more expensive” with healthcare costs rising.
On the flip side, retirement accounts are also experiencing a steady increase. As of 2023, the average 401(k) balance for individuals aged 65 and above has reached $203,000. Throughout history, there’s been a pretty steady increase in the number of employers providing matching retirement benefits too.
Interestingly enough, Gen Z, the youngest working generation, are leading in retirement savings (compared to their parents and grandparents). It’s clear that the current young people, who are indeed the present and the future, are aware that planning and saving early is crucial. This is a great sign overall for the nation’s economy. But how will they retire – what does the future of retirement actually look like?
Key Technological Breakthroughs that have impacted retirement
Printing press (15th century tech)
Back in the mid-15th century, Johannes Gutenberg revolutionized information dissemination with his invention of the printing press. It made producing books, pamphlets, and financial information (investments, loans, trade transactions, and other financial dealings) more accessible and affordable, allowing people to navigate their financial future.
The Steam Engine (1710s)
Invented by James Watt, the steam engine was a crucial development in the Industrial Revolution. This technology made it possible to power machinery and transportation in new ways, creating new industries and changing the nature of work. This may have had an impact on retirement (although retirement was not a term until the 1900s) by creating new job opportunities and changing the skills and knowledge needed for different types of work.
The telephone revolutionized the way people communicated with each other. People were able to manage their finances remotely, contact financial advisors, and receive information about their investments. It also made it easier to stay connected with their loved ones, which indeed is an important aspect of emotional and mental well-being especially in post-work age.
Electric light (1879)
The invention of the electric light bulb by Thomas Edison in 1879 allowed for longer hours of productivity and leisure. Of course, it had a significant impact on financial future planning and post-work life, as it enabled people to stay up later and enjoy their leisure time with better lighting.
Automated Teller Machine (1967)
In 1967, Barclays Bank installed the first-ever Automated Teller Machine (ATM) in London. This revolutionized banking, making it easier for retirees to access their money and manage their finances.
Computerized financial planning tool (1969)
The first computerized financial planning tool, the Life Insurance Company Evaluation (LIFE) system, was developed by American Express in 1969. It calculated individuals’ life insurance needs and retirement income requirements.
Electronic stock exchange (1971)
1971 saw the launch of the National Association of Securities Dealers Automated Quotations (NASDAQ), the first electronic stock exchange. This made it easier and more efficient for retirees to invest in the stock market without the need for a physical trading floor.
Telemedicine service (1993)
In 1993, the first telemedicine service, Consult-a-Nurse, was launched, allowing patients to consult healthcare professionals over the phone. Retirees living in rural or remote areas could access healthcare services more easily.
Online Retirement calculator (1997)
The Vanguard Retirement Nest Egg Calculator provided retirees with a free, easy-to-use tool to estimate how much money they would need in retirement.
Mobile health app (2008)
The first mobile health app, iStethoscope, was developed in 2008. This allowed healthcare professionals to use their smartphones as a stethoscope, which could be used to listen to patients’ heartbeats and lung sounds. This made it easier and more efficient for patients to receive medical care, particularly for those who have difficulty traveling to a clinic or hospital. While this development was not specific to retirees, the concept has had a significant impact on the healthcare industry by providing greater accessibility to medical care for a wider range of patients, including those who may have difficulty traveling or have limited access to medical facilities.
The Future Impact of Technology – A Glimpse
Majority of retirees and pre-retirees are concerned about healthcare costs. But as technology can provide telemedicine and remote monitoring to reduce healthcare costs, the concerns are slowly decreasing. The use of wearable technology, for example, will only increase with time. And automation (of course) will impact retirement by both eliminating and creating jobs.
In this article, our main focus will be on technology’s impacts on various facets of retirement, with the broad impact of tech devices in the back seat.
1. Impact on what it means to be retired
Here’s what numbers say on different age groups’ current usage of technology:
|Smartphone Ownership (%)
|Social Media Usage (%)
|Tablet Ownership (%)
|Internet Use (%)
|Frequency of Being Online (%)
|Almost Constantly (48)
|Several Times a Day (36)
|Once a Day or Less (23)
|Rarely or Never (8)
As you can see above in the Table 1, people of the 65+ age group (who are most likely retired) are using very less tech in their retired lives. But guess what? The stats are about to change.
Virtual reality is already redefining retirement life. It has enabled people to explore the whole world without leaving their homes. [Funnily enough, the first VR headset came out in the 1960s.] The extent of VR’s impact on retirement will increase with time, but it’s not the only tech influencing retirement:
- Retirement homes will be replaced by smart homes with assistive technology.
- Robots will provide healthcare and companionship.
- Autonomous vehicles will help retirees get around.
- And retirees will be able to stay connected with family and friends through more than social media and video conferencing.
- Tech overall will enable people to work remotely and supplement their retirement income.
The future of retirement life, as such, seems tempting. Of course, this technological excitement surrounding retirement is not without its drawbacks. As people retire earlier and work less, the economy may suffer. UK, for example, is suffering from labor shortages due to early retirement. The current reasons for “early retirement” there obviously vary. But yes, technology (especially VR) could make retirement life overly luxurious, hence tempting; doing harm to the overall economy.
2. The Correlation between Technology and human Lifespan
The future of retirement is intertwined with the correlation between technology and lifespan. In 1900, the average global lifespan was 31 years, and today, it is 76. Technology has enabled medical breakthroughs like antibiotics, vaccinations, and surgical procedures. It’s reducing deaths from infectious diseases, as well as infant/maternal mortality rates. The effect of tech here, as you see, is pretty straightforward. In 2019, BofA has predicted that (with the rise of medtech) the human lifespan could soon surpass the 100-year mark. This makes one wonder even more about the future of retirement. Also, how healthy the lifespan is going to be, is also going to be a crucial factor. The least we can expect is advancements in assistive technology helping older adults age in place and maintain their work life for longer. But much better would be actual humans maintaining good natural health to remain in the workforce.
3. Impact on retirement savings and investments
Savings is not the first thing that comes to mind when thinking about the impact of technology in retirement. Obviously so, but it’s an area where technology is having a transformative effect. Technology is enabling people to take greater control over their retirement savings. For example, online tools and calculators help individuals understand how much they need to save to meet their retirement goals. The global fintech market is expected to grow to $556.58 billion by 2030, which will provide new investment and financial planning tools for pre-retirees.
Ah, but wait! As they say, there’s always another side to a story:
High-frequency trading has turned the stock market into a wild beast, capable of sudden and violent movements. This raises significant challenges to long-term and retirement investors; ones that extend beyond mere financial losses. As technology evolves, new forms of trading will emerge, and the market could become even more frenetic. Also, the use of technology in retirement savings is already leading to over-reliance on automation and lack of human due diligence. And it tends to create a false sense of security [for example, is currently ultimately leading pre-retirees to invest heavily in speculative digital assets (like crypto) as a “hedge against inflation”, rather than saving].
Okay, below is an interactive chart comparing the historical median US retirement savings (since 1983) vs the NASDAQ-100 Technology Sector Index (NDXT) growth in the recent times (since 2007). Comparing the time taken by the both to triple, the progress in the technology sector is roughly 2-4 times faster than the growth in retirement savings:
So, in 1989, the average retirement savings account was $21,878, and it took 24 years for a threefold increase. However, the technology industry tripled in just 10 years from 2013 to 2023, and in fact, sextupled if we measure from 2007 (even if we exclude the sharp peak in 2019).
Overall, it’s not that technology disrupts retirement. Rather, technology and retirement both undergo gradual changes over time, with technology always being in the driver’s seat. All aspects of retirement are bound to digitize in the future. But the magnitude and immediacy of the impact ultimately depends on how exponential the technological growth indeed is.