view transcript

Robert Powell: It's actually going to get a little bit more dower from here. I'm often accused of having the most depressing job in America, which is telling you that you don't have enough money saved for retirement. That you're going to outlive your assets, that healthcare expense will be $250 thousand plus, and my job is to at least help you get through some of that. With our panelists today, we'll help you get through some of that. But, just as an aside, my wife used to ask me how my day was when I got home for work, and she stopped doing that because I would tell her, "We don't have enough money saved. We're going to outlive our assets, we'll never be able to spend all that on healthcare, and our kids cost a lot of money as I mentioned." I think I will take him up on the ATM idea.

Robert Powell: Anyway, for those of you who don't know me, I'm the editor of The Streets Retirement Daily, I'll be your host today. It's great to see you. A lot of folks have come from near and far. Look forward to meeting you who I haven't met before. It's a packed day, so we're going to sort of get straight to it.

Robert Powell: Our first panel is the future of retirement predication and perspectives, which is an interesting way to start the day, I must say. We could have ended the day with this discussion about the future of retirement, but I thought I would take Stephen Covey's advice and say we'll start with the end in mind. So, we're going to start with the end in mind, and then get to the more practical things along the way. This will give you a sense of a mind bending exercise, a little bit of crystal ball gazing, if you don't mind.

Robert Powell: I'd like to invite our first panel up. We've got Roger Ma, who is the founder of LaidAbout. Roger. Jack VanDerhei, who is the Director of Research for Employee Benefit Research Institute. And, Bruce Wolfe who's a principal at C.S. Wolfe & Associates. Gentleman, thank you. Let me just start by having you, if you don't mind, just give a 30 second introduction to our audience about who you are and what you do.

Roger Ma: Hi everyone, I'm Roger Ma. I'm a founder of New York City based financial planning firm, LifeLaidOut. I specialize in working with those in their essentially accumulation phase, so those in their 20s, 30s, and 40s, to really figure out which financial goals to go after, how to reach those, and how to thoughtfully come up with efficient portfolio.

Robert Powell: Jack.

Jack VanDerhei: Good morning, I'm Jack VanDerhei, I'm the Research Director of the Employee Benefit Research Institute. We're a small think tank in Washington. We've been around since 1978, we're a non profit, non advocacy. You might know us because of the databases we've built. I've got the largest 401K database in the world, 27 million people from over 110 thousand plans. We also have an IRA database of about 24 million individuals. We do a lot of work every time congress comes up with yet another great idea to try to figure out basically what the likely impact will on employees and employers. We'll talk about that a little bit today.

Bruce Wolfe: Great, I'm Bruce Wolfe. I'm the Principal at C.S. Wolfe & Associates, which is a small consulting firm that focuses on helping insurance companies, asset managers, distributors around the topic of retirement and retirement income. Prior to that, I had been at Black Rock, where I built the Black Rock Retirement Institute, which was the firm's thought leadership platform on longevity and retirement, as well as I was the COO for their retirement business.

Robert Powell: Thanks gentleman. Just a quick show of hands before we get started. How many financial advisors, investment professionals in the room? CFPs? CIMAs, CPWAs, RMAs? Great. How many, I don't want to call you non professionals, but sort of non professionals in the audience? Great. Wow, big. Of you, how many are retired? Pre-retiree? Semi-retired? Okay. All right, good. All right. That will give you a sense of the audience that we're speaking to. Any Gen X, by the way? Great. Millennials? Post millennials? Are you a millennial? Really? Yeah, okay. Post millennial, Gen Z? Not a one. So, your children are in that bracket.

Robert Powell: We're going to start with sort of a table setting. Jack has done all this research around retirement income adequacy, and you'll be able to give us a sense of where we're going, from where we are.

Jack VanDerhei: Okay, thank you.

Robert Powell: Let's start there.

Jack VanDerhei: This always turn out to be the most depressing part of any conference I go to, especially following Ed, I think you're going to see a big difference between the optimism he was giving you and what you're about to hear. Very, very quick background, the late '90s the governors of several states were quite paranoid as far as what was going to happen when their current workers retired. Because, if they became financially indigent, they, the states, would be on the hook for things like nursing home costs because of Medicaid programs.

Jack VanDerhei: So, the contracted with EBRI to basically start building these state wide retirement income adequacy models, looking at people that are still working. Basically, we did it for Kansas, we did it Massachusetts, we did it for Oregon. Before my boss could have me do 47 more models, I decided it would be smart just to a national model, and we've been doing that ever since 2003.

Jack VanDerhei: We use the kind of 401K data I just talked about, the IRA data we talked about, we put in basically, everything you would expect to be there at retirement age, net housing equity, social security, DB, DC IRA, et cetera. And then, from every single household in the United States, at 65 we run a thousand different life paths. Why do we do that? Because we got to get longevity risk in there, we got to get post retirement investment retirement in there, and very, very importantly we have to get long term care risk in there.

Jack VanDerhei: We've been doing, as a function of age, as a function of wage, et cetera, what's the probability A, you will not run short of money in retirement, so your probability of successful retirement. Currently, only 58% of households between the ages of 35 and 64 are predicted not to run short of money in retirement. Now, you might go, "Well, so you run short by a couple of bucks, no big deal." The other thing that we do is we do what we call retirement savings shortfall, which is just a fancy word for what's the present value of the retirement deficit you have? How much more would you need in your account at age 65 basically, on after tax basis, not have any shortages in retirement? The current number for everybody 35 to 64 in the US, $3.83 trillion. That's how far short we're going to run. And, that assumes, the current social security benefits are going to be paid out.

Jack VanDerhei: As we all know within 15 years, the trust fund is supposed to go down to zero. It's supposed to get a 23 to 24% reduction in social security benefits. If that would happen, the deficits go up. If you're in the 35 to 39 age range, that's the youngest that I simulate, because it's really hard to get a good handle on people younger than that. You've got a 25 year old making 40 thousand, what's their age wage profile going to be like for the next 40 years, it's tough to get a handle on that. But, for those youngest cohorts, 35 to 39, if the social security trust fund goes to zero, and we have the proportionate reduction in benefits that has been illustrated by the Chief Actuary for the social security office, there's going to be a 17% increase over and about that.

Jack VanDerhei: What does all this mean for you as investors, for you as advisors? Some thing is going to change. I'm not sure what it is, but you can't have a situation like we have today, where there are so many uncovered, and even if they are covered, they're going to have massive deficits at retirement.

Jack VanDerhei: So, here's my quick prediction. There's going to be four things. There's going to be something to deal with the coverage problem. Depending on who you believe, some place between 50 and 80% whether your part-time or full-time, are going to actually have coverage in any particular time period. But, representative Neal had an ARPA, automatic retirement pension act, two years ago that he proposed. Now, that he's Chair of Ways and Means, that's going to come back and play, no doubt very quickly. That would say all employers, with perhaps, some size exemptions, are going to have to offer some type of automatic retirement plan. So now suddenly, we have a situation, they might turn out to be auto IRAs, much like the states are doing, for example Oregon, but basically, that will get at the coverage problem, at least partly.

Jack VanDerhei: The other thing that we're going to have to deal with is the fact that there is so much leakage going on. I'm sure many of you are aware of people who had pretty decent account balances, they changed jobs, and what did they do? They didn't roll it over, they didn't leave with their current plan, they didn't take it to their new employer, they just cashed it out. One of the things that is very likely to happen, and I know it's been written about quite a lot lately, is some kind of auto portability. Where there's some kind of a clearing house, and basically what happens when you change jobs, is that the default, is that the money goes into clearing house and tries to match you up with a future employer who is also going to be sponsoring a retirement plan. So, instead of having a bunch of little account balances, which are really highly susceptible to being cashed out, you know have it basically rolled over until you have one big 401K balance with your next employer.

Jack VanDerhei: The other things that we have to worry about, to be quite honest, is the single most important factor that takes families that look like they're going to be okay at 65, and they still end up running short of money at retirement, is the long term care expenses. I'm sure many of you know, even better than I, what's happening to long term care insurance market, in the last 10 to 15 years. Something is going to have to happen, whether it's some kind of catastrophic long term coverage, whether the federal government has to get involved through a reinsurance program, I can't tell you. But basically, that is still too much of a risk, and we can't continue with a public policy where we find so many of our retirees, and retirees who saved like they were supposed to have saved prior to retirement age, end up basically running completely short of money because of long term care.

Jack VanDerhei: And the final predication, not very bold, but just has to have some kind of situation, going forward where people just have to realize that 65 is no longer the magic number. They have to start learning that they're going to need to defer retirement age if they're going to have any chance of having a successful retirement.

Robert Powell: So, I didn't think we could get any more funnier and optimistic than Ed.

Jack VanDerhei: Thank you, thank you.

Robert Powell: But you did it.

Bruce Wolfe: I can help.

Robert Powell: Yeah, well, you're the counterbalance Bruce. Give us a little optimism here.

Bruce Wolfe: Yeah, so, I would obviate almost everything that Jack has said. I think of things a little bit differently. When I think about retirement, first off, I think it's a term, again, this is no great news that no longer is really that relevant. Just like the baby boomers back in the '60s and '70s helped to redefine what it meant to be in your teens or in your 20s, in terms of what your role was in society, I think the same is applied to individuals now as they move into their 60s and 70s.

Bruce Wolfe: What I mean by that is at a very basic level, we used to think about life cycles in terms of three phases, right? You went to school, you worked, and you retired. I think it's quite clear, that we're already seeing a disruption in that approach. And, that's all a good thing. The major disruption that we're seeing is individuals are thinking about retirement much differently. They're thinking of it in terms of just how do I continue to have fulfilling life as I get older.

Bruce Wolfe: ... I was on train ride, it's Saturday and I'm little bit under the weather, so I wrote down a couple of notes, but, I was thinking about there's kind of four themes that came to mind when I think about this whole topic. One is, and I'll come back to each one of these, one is positive, one is integration, three is markets and economics, and four is personalization. I'm not going to use an acronym because I figured that out, that was probably a bad idea as well. But, if you think about positive, integration, markets and personalization, you come up with a pretty negative ... Again, it was early in the morning, I'm on the train, so I apologize.

Bruce Wolfe: So let me come back to each one and spend a few minutes on what I mean by each one of those. For positive, our society, particularly in the United States has always viewed people getting older, in retirement, as either a crisis, or an issue, or a problem that needed to be solved. Right? You all have your own probably personal situations of how this is been reinforced. And, I think what we're starting to see, which is actually much closer to reality, is it's an opportunity. Right? This is a point where individual see themselves as continuing to be full fledged members of society with aspirations or how to continue to grow and develop and contribute to society. And so, I think the whole kind of rubik of how people are thinking about themselves, and how society's reacting to older people if definitely starting to change. And again, that is a huge thing.

Bruce Wolfe: If people always say, we're not saving enough, and Jack just talked to this point a minute ago. Well, think about it, who want to save a lot of money so that they can make sure they can buy all their medications or they can save enough money so they can go live in a nursing home, right? That's not a very aspirational exciting reason to why you should be saving money as you get older. So, I don't think it's too much a surprise that people aren't doing that great of job of doing it. I think the reality is, if you start to frame and talk about growing older and a much more positive and interactive way, I think people will respond by not just saving to put money aside, but also I think they will see themselves as individuals who genuinely can continue to contribute to society. So, that's kind of point number one that I wanted to make.

Bruce Wolfe: The second one around integration, so historically, when you look around, as you get older that we create institutions to isolate you, right? And by far, probably the most prevalent example is nursing homes, old age facilities, or older living communities. You all can see that. I think, quite frankly, due to a couple great factors, one being technology and the other being just the whole idea of mobility be it through Uber and other organizations that have come up, we're going to start to see more integration rather than isolation of individuals as they get older. I think that also reinforces the first point I was making about individuals wanting to continue to contribute and be a part of society and be integrated into society.

Bruce Wolfe: In, I think it's Germany, and the UK, they actually have a government subsidy program where they will subsidize individuals, younger people in college, who will go and live with elder individuals and help them with odd jobs around the house, and they obviously live there, and just make it a little bit easier for the individual, and there's actually a subsidy that the government provides for that individual, that younger person to be a part of that dynamic. I mean, that's just kind of one very small example of how we're going to see, I believe, much more integration.

Bruce Wolfe: Along those lines, I don't think people who want to get older want to be isolated, or want to be the unique group. How many people here are excited to wear a hearing aid, for example? Just as an example. Right? Because, you think about it.

Robert Powell: What did he say? How many people ...

Bruce Wolfe: Immediately, right? Everybody doesn't want it, because people think of me as being old. What about if we use earbuds, and those have amplifications in them. Serves the same type of purpose, but now, everybody wears those, you just happen to have slightly a modified version of earbuds. Somebody who's 20, 30, 40 or 50, they're all wearing them, so you're no longer seen as somebody who's been labeled, "Oh, you're old. You need to have that." Versus, it's just another type of product that has been modified slightly, for an older individual. And so, I think that would be kind of my second one around integration.

Bruce Wolfe: Markets and economics. This is probably the most under utilized and the least talked about, but has the greatest potential as our society gets older. And, the idea behind that is, how often are companies talking about targeting older individuals in terms of products and services. There was some work that was done, where they asked businesses how many of you have created, what we'll call an aging business strategy? And the answer was 15% of the companies in the US. That's pathetic, right? I mean, who has most of the money, who's interested in spending that money, yet only 15% of businesses have actually sat down and tried to design products and services coming back, like the earbuds as an example, for older individuals. I think we're clearly going to see more and more companies moving in that direction. To be quite honest, I think it's kind of pathetic that we haven't seen more action in that space yet because it's a huge business opportunities that firm have not taken up.

Bruce Wolfe: And then, within that context, the idea of hiring individuals who actually can resonate and align with that older market, is also another great reason why I believe individuals will continue to have the opportunities to work and will be in demand with many, many companies. So, it's not necessarily we have to keep somebody because they're older, it's actually you want them, because when you're trying to design products for people in their 70s and 80s, it's probably a good idea to have some people around, who actually can relate to that. So, that will be kind of the third area that I wanted to mention.

Bruce Wolfe: And then within the economy, so we talked about markets and then economics, I think from an economics stand point, I think there's going to be a huge impact as demographics shift to an older profile, just even in terms of GDP. So right? Everybody here is familiar with GDP. There's only really two pieces that go into the definition of GDP. One is the number of workers, and the other is the productivity of these workers, so if more and more people tend to leave the workforce, it doesn't have to be too complicated or be a rocket scientist, at that point I used to design ballistic missiles, so I used to say it, we're going to see pressure on growth on the country just because the demographics are moving in the wrong direction. We already see this in some other countries that are farther along like Japan, as a probably the role model example around the world. Again, another reason why we need to figure out ways to engage and keep individuals in the workforce.

Bruce Wolfe: Another other little nugget that I'd seen in some writings was, that when you look at the S&P500, and I can't verify this, 'cause it seems pretty high, but it said that the 87% of enterprise value is associated with intangibles. Intangibles are things such as patents, intellectual property, and so if you think about that, in your organization, who has the highest level of that? It's going to be people who've been in your organization the longest time. So the idea of having those people leave early versus leave later doesn't make any sense at all. In fact, I've written a few articles for the Wall Street Journal, and one I most recently did with a friend of mine from Brookings, we actually talked about phased retirement and transitioning individuals into retirement over a much longer period of time out of the workforce. So, for those of you that interested, there's several articles about decision making and aging that I've written for the Journal over the last four or five months.

Bruce Wolfe: The last area that I wanted to talk about is personalization. So, the P. Around personalization, I think where we're going to see the biggest impact is certainly on the healthcare side, right? Between gene therapy, and some of these other revolutionary initiatives that are underway, we're going to start to see that individuals can get much more personalized, individualized therapies. And, it could be through people having for example, little chip embedded in them that can track all their vital signs to the point where actually drugs can be dispensed into them, that are already integrated into their system, again clearly not a medical doctor by any stretch of any imagination.

Bruce Wolfe: So, I think that is going to be a big area, and then the other area around personalization is going to be the home. Going back to my point I made earlier about integration, that individuals now are going to be able to stay in their own homes because of great improvements around technology in designing homes that actually can accommodate individuals as they get older, right? So, there's some great work that's been done at MIT, where they basically can now, not only track where you are in your apartment, but actually track all your vital signs all day long in your apartment. So, just think of all the ramifications and the benefits that would bring to individuals, particularly many of you who maybe have older parents that are still living in their homes, knowing these types of sensors and capabilities are available, would be a dramatic improvement, and obviously help you sleep better at night.

Bruce Wolfe: So, I'll stop there, those are sort of my four categories, and we can come back and talk about other things.

Robert Powell: Roger, if we're talking about retirees and we're talking about 2050, your clientele and perhaps the children of the folks in this audience, and as a side note, I'm the parent of triplet boys who are now 24, so they're in that sweet spot in terms of starting their careers, have a little money, not a lot, thinking about retirement, started Roth IRAs, thanks Ed. And, I think about some themes about them. One is side hustles, is sort of a way of life for them, not only into their regular job, but also the FIRE movement is sort of taking them by storm. Two things, side hustles are real, and FIRE is real?

Robert Powell: Does everyone know what FIRE is by the way? Let's start there.

Roger Ma: There's a number of different terms for having a side job, some people call them side hustles, 20% projects/careers, whatever you call it, seems like everyone has an Etsy store, or is selling stuff on eBay. There's a number of different terms for having a side job, some people call them side hustles, 20% projects/careers, whatever you call it, seems like everyone has an Etsy store, or is selling stuff on eBay.

Roger Ma: And then, what Bob said about FIRE, basically this is an acronym for what the movement's calling financial independence, retire early. Basically, what this involves, people in their 20s and 30s, instead of saying, "Oh, we're going to work 'til 65, and then enjoy our life." What they're saying is, "Well, wait a second, we can decrease our expense, save a fair amount of money, and then retire in our 30s and 40s, and then not have to work, and just work if we want to." Basically, the concept is save enough money such that your investment portfolio and any other earning are such that they cover your living expenses.

Roger Ma: And so, what the movement uses to get a sense of, how much do I have to save? They're relying on two studies, one from Bill Bengen, financial planner, in 1994 came up with the 4% rule, and then a group of professors from Trinity University couple years later basically came to the same conclusion. Bengen basically said, I think in the 90s, it was thought of the safe withdrawal rate from your investment portfolio was fairly high, 8, 9, 10%. Bengen said, "Wait a second, why don't I look at actual returns," from I think it was 1926 to 1975. "And look at a portfolio of 50% bonds and 50% stocks, and see what is the withdrawal rate that I can safely take out in the first year and then inflate that and each incremental year where I won't run out of money by year 30." And basically what he found was that 4% was that safe withdrawal rate.

Roger Ma: This movement says basically I need to save whatever my annual burn rate is divided by 4%, or they'll simplify it to my burn rate times 25.

Robert Powell: If you can just address the pros and cons of FIRE. I look at it from maybe a realist point of view, that's a long time horizon to fund.

Roger Ma: Totally.

Robert Powell: And lots can go wrong in between 30 and 100.

Roger Ma: Yeah.

Bruce Wolfe: Not 40 and 100.

Robert Powell: 40 and up. I'm skeptical. I'm just skeptical.

Roger Ma: Yeah, no. I think some of things that people say, "Well, the movement is usually research based on a 30 year retirement, but if you retire at 30, you might have a 70 year retirement." I think there's research out there from [Kits' 00:27:04] or Pfau that says, "Well, as your retirement period extends to 40, 50 years, basically there's floor in that safe withdrawal rate, about 3.5%.

Roger Ma: That aside, when we think about the pros and cons of this movement. I think the pros are one, that people that are on this movement are pretty deliberate about their expenses. They're not just going out there and trying to keep up with the Joneses and saying, "Oh, my neighbor bought a Lambo, so I want one as well." I think that's one pro.

Roger Ma: I think the second and third pro is that they invest pretty efficiently, so they're mostly using low cost passive mutual funds. Probably paying 10 bps or below for their investments. And then they're using very tax efficient vehicles as Ed was talking about in his prior presentation. They're not just maxing out their 401K, but they're using vehicles like the mega backdoor Roth IRA that allows you to get 25 to 35 thousand of additional money into a Roth IRA vehicle. They're using the regular backdoor Roth IRA which allows you to get 5,500 into a Roth vehicle. They're also using health saving accounts as stealth retirement vehicles, because those are the only triple tax free vehicles out there. So, I think those are the pros. I'll stop there for a second. Do you want to hear the cons?

Robert Powell: Sure, unless you guys want to challenge him on it. You guys are like me.

Bruce Wolfe: I think the reality is, right, that's not what's going to happen. People may, and you can tell me what your experience has been, but I would guess that people who are in their 40s retire, at some point ... First of all, I would think people who retired in their 40s are going to be very ambitious, right? Very disciplined, focused folks. My guess is if you say to them, and then again maybe they have other vocations, or hobbies, or philanthropy things that keep them busy, but I think that being out of the workforce and not being productive would be challenging for them just on a personal level.

Roger Ma: Yeah, and I think that gets, kind of flows into some of the cons. So I think one of the cons is that, the movement, while they are deliberate about their expenses, they're also sometimes too highly focused on their expenses. You might have some making 100, 200 thousand dollars a year, and instead of living in an apartment complex, they are living in a U-Haul in the parking lot, to be able to retire in five years. I think that's one of those things.

Roger Ma: While they're deliberate about their expenses and they are not trying to acquire more material belongings, sometimes think about Maslow's hierarchy from your intro to psychology class. We all have a number of different needs. Even though people in this movement are not trying to acquire more stuff, I think there is an overemphasis on trying to fulfill the financial and security needs, but maybe not so much the psychological needs as well, or the relationship. I think that's going to be an issue. Like, you said Bob, there's a lot of things that can happen over that period of time.

Roger Ma: I think the other thing too is, when you think about someone that is on this movement, there's some reason why they're on this movement. They want to retire, and that's typically because they don't like their job. And they think, "Well, I have to do something extreme. I'm going to save all this money, and walk into my office and say, Bob, I quit. And then I'm going to go travel around the world."

Roger Ma: But, one of the interesting things, there's this Yale professor Amy Wrzesniewski, that says that a lot of times you don't have to make big changes to create a job that you like. A lot of times you can job craft or tweak your job, and so I think that's the other thing that some in the movement may not understand. They think, oh, I need to save 25 times my annual burn rate, then I'm going to do whatever I want, when in fact a lot of times, it's just subtle change of, "You know Bob, I really don't like writing about retirement. I think my strengths are better played to healthcare or something like that." I think some of those simple tweaks maybe better for people in the movement.

Robert Powell: I have designs on becoming a pickleball instructor at some point. It's a growing sport. We had a pre call, but I'm going to go off script for a second because you mentioned it, and I think it's sort of relevant. I think about a couple things. One is, for many people housing the biggest expense in retirement. If you look at the surveys, the Bureau of Labor Statistics suggests that you will spend 33% of your income on housing in retirement. One third. In often times, your equity maybe your largest asset as well. And then, as a side note I'm involved in my community age friendly effort. Much of what we're examining are things around housing, transportation, social inclusion, et cetera. But, housing is a big deal at the moment. There's talk about co housing, right sizing, reverse mortgages to unlock equity, et cetera, et cetera. Just for a moment think about 2050 and what housing look like for folks in this room and their children.

Bruce Wolfe: I think on the housing side, as I mentioned earlier, right? I think the actual facility itself will become more of a technology based infrastructure. A place where you can track information, other people can track your information. I think the ideas of your refrigerator, not only being able to tell you that you're low on milk, but actually putting an order to the Stop and Shop, or whatever it is, to purchase it, and then it'll be delivered to you. I think, where you are not even involved in that process, I think those types of things are very much going to happen in the next 10 or 20 years, type of deal.

Bruce Wolfe: I think the key aspect around the housing piece is that it will no longer be something that is for better term, becomes a burden as you get older in a sense. Everyone is worrying about how I'm going to get my parent out of the house. It's going to be a little bit more, what can I put into the house, that'll allow that individual or couple, to be able to maintain a certain standard of living and a certain level of safety. I think that's going to be kind of one of the key dynamics.

Bruce Wolfe: Maybe some of that will be very practical, example I gave with Germany and UK where there's incentives that the government puts in place to try to create and environment where you have younger individuals that are a part of a family, kind of loose term, a family structure, to help older individuals who are living that house. I think those are going be kind of the interesting aspects associated with it. I think the idea too, around the mobility, right? Which ties right into it, that people are usually living at homes, but that becomes an issue because they can't get from A to B, you know the bus doesn't come there. I think with Uber, which we already see, and those types of mechanisms, yeah, that will become also less and less of an issue of isolation, shall we say. 'Cause there's definitely a lot of research that's been done, that talks about the biggest issues as you get older is isolation.

Bruce Wolfe: In fact, it's in the UK where they have a czar of, I don't know if it's called isolation, no, I think it's the Ministry of Loneliness. And there's actually an initiative underway to try to figure out how do you keep people connected to society because it's a huge recognition that suicide, and premature death has a strong connection back to individuals having to live alone. So the connectiveness piece also become less of an issue, and quite frankly kind of less of a negative for individuals as they get older.

Robert Powell: Jack, any thoughts about housing?

Jack VanDerhei: When we were doing the studies for the states in the late 90s, this was without a doubt the single biggest concern that the governors had. We did an extensive search of the literature, and we did a lot of different modeling, and I think you're going to find this bifurcating, those this individuals that still have a house at retirement age, are going to, I think, and for a lot of reasons Bruce mentioned, be very likely to continue to stay in there as long as they can. They're not going to by and large take advantage of RAMS, they are going to basically keep in the house and as long as they have the ability to pay their expenses, the social security, DB, withdrawals from defined contribution plans and IRAs, they are going to stay there. It's when basically they run out of all other financial resources that they're going to basically sell the house, take the net proceeds, put it in some non tax advantage account and basically move into an apartment.

Jack VanDerhei: I think though, the other thing you need to focus on is what happens, either to those people at that time, or those people who retire without a house. I think you're going to, almost through necessity find some kind of economy of scale needed to take care of these individuals. Whether it's moving back into urban areas and taking some of these large complexes, which are no longer being used, and having some kind of combined medical care and living facility for individuals who have no other resources. It's just too expensive to try to do many of the things that people have become accustomed to, to have their own kind of personal freedom if they don't have those kind of resources. And, again there's a lot of different pilot projects being discussed on that. But, I think it's going to be more of the same for those who have the resources, and a collection of living facilities probably in urban areas, as we move forward, I think you said in 20 to 30 years from now.

Robert Powell: Any thoughts Robert?

Roger Ma: I just think about location too, in terms of, let's say you don't need full-time care and you want to live in Manhattan, maybe you don't have to live in Manhattan just because of some of the technological innovations that are happening with self driving cars and things like that. You're not able to drive, but you want to be close to the action. You might be able to live in Long Island, Westchester and things like that, rather than to live on the Upper East Side. I think that will be an interesting development.

Robert Powell: Yeah. Bruce, in terms of people being able to age in place, take advantage of technology, I'm often reminded, I serve on the board of my town's senior center council on aging, and we once held a little seminar on medical alert systems. One, no one showed up, partly because they were already down on the ground and they couldn't get up.

Bruce Wolfe: [crosstalk 00:38:40] dinged them, they wouldn't shown up.

Robert Powell: Yeah, I know, right? But-

Bruce Wolfe: Heart palpitation or something.

Robert Powell: But the true point was for many folks who use the senior center, the cost of this system was far too great. So, somewhere between having the money to afford this oncoming technology, right? Smart refrigerators, et cetera. And this other half of the world that may not be able to take advantage of it, right? We're going to have a great divide perhaps, or is it ...

Bruce Wolfe: I don't know, I guess would be the short answer. But, my guess would be that hopefully over time, the health industry will recognize the value. For example today, more and more it is covered by insurance, right, to be proactive in terms of monitoring and taking care of your health. Whereas, 10, 20, 30 years ago, if you want to go on a regular basis for a particular type of service, a lot of times it wouldn't be covered. They'd only cover it maybe once every year or two. Whereas now we know if you go to your doctor or certain specialist on a regular basis, it's actually a net net positive for the health industry. And, the insurance industry has fallen in line. My general sense is as these technologies come out, and there's clear cost benefit advantages.

Bruce Wolfe: So far example an individual to have implanted something that monitors their health, so they don't have to go every single time to the hospital. A doctor remotely can monitor what's going on, particularly if there's some type of incident, they can maybe tell them where they should go specifically based on that. Right, that to me seems like smart good business, in that it would net net reduce a lot of expenses associated with healthcare. And so, my hope would be that insurance over time would provide a mechanism for individuals to get those types of new technology capabilities that otherwise, would not out of pocket will be able to afford them. So again, it may not be the next five years. If you really went back and looked at the history you would already see that we've already moved in that direction in a sense of trying to be more proactive and not just reactive when you have some type of disease. As we all know, usually it's too late in a sense at that point.

Robert Powell: I'm a big fan of MIT's age lab and Joe Coughlin's work. Anyone familiar with his work by chance? Couple people. Yeah. Joe, in his latest book The Longevity Economy talks about meeting the needs of a growing population, but in that book he also talks about, I think what is perhaps the biggest trend that we haven't talked about, which is that this will become the century of women, of females, and that they'll be ... Women will take over the world, so ...

Bruce Wolfe: I thought they already have ... Maybe just in terms of specific numbers but, I think ...

Robert Powell: Right.

Bruce Wolfe: Many of us who are married, that's a well known fact already.

Robert Powell: Women will outlive men, they will outnumber us in both ... Whatever. We have 10 minutes left, we'll answer this one last question then we'll take questions from the audience. Any thoughts about the age of women? And, what to expect in terms of the future?

Bruce Wolfe: My thoughts on women, would be a couple. One as relates to finances, we haven't really talked a lot about it, I know you have other panelists. A lot of my expertise is around retirement, retirement income strategies. But, when you think about women and you look at the information about them, there's a lot of very interesting statistics that will, I think kind of play out. Right? For one, they're more conservative, they're more process oriented than men are. And so, I think that will start to have implications on say your business. And certainly the business of financial advisors as they start to more and more deal with the female side of the house in a sense, in terms of managing assets. So I think that is sort of one big piece.

Bruce Wolfe: I think the other big dynamic around women, and we're starting to see that is there's been salary discrepancies, and basically the gender inequities that have been out there. I think that is starting to get rectified, which certainly it should of probably 10, 20, 30 years ago. I think the interesting dynamic in that, is one of the reasons that there's been an inequity is that women have to leave the workforce, or many of them do when they have children. And so, I think it's going to be very interesting to see about how that gets rectified.

Bruce Wolfe: I think that actually dovetails into the broader context of what I talked about earlier, in that people in general are going to be entering and exiting the workforce over their whole life versus following, as I said at the beginning, that preplanned go to school, work and retire. And so, I think actually that will play well towards this kind of unique dynamic associated with women, particularly when they start to have children. I think it will become more common for individuals to kind of come and go from the workforce, come and go back to school, well into their 70s and 80s. And so, I think that actually will kind of work well as it relates to this gender difference that we seen.

Roger Ma: Yeah, I think there already a lot of companies are already offering that flexibility of a large amount of maternity leave for women to leave and come back. I think they also put it on par where they're giving men more paternity leave as well, and making them take it. So, it's not seen as a negative that you feel this pressure to rush back. I think there'll be that added flexibility.

Roger Ma: I think the other interesting dynamic is that, it's not longer just the case that the man is the bread winner. Women are becoming more and more the bread winner as well, so that's an interesting dynamic that I'm seeing, so ...

Jack VanDerhei: Yeah, we modeled exactly the components that Bruce talked about, and even if you look at the youngest cohort we model, 35 to 39, the average retirement deficit for single male would be $36 thousand. The average retirement deficit for a single female is almost twice that, $70 thousand. Even if they're married at retirement, you have a big difference between widows and widowers. What with found would be one of the most important changes, I talked about auto portability in opening comments, the fact that when single females change jobs, they are much more likely, oftentimes because their account balances are smaller, they've been there for shorter period of time, or their wages are lower, they're much more likely to cash out those balances. If something like auto portability became universal, and we'd have to talk about safe harbors et cetera, et cetera, but we found that as much as a 38% decrease in retirement deficits could actually play through the system, and you would find that they'd have much more money obviously available when they finally did retire.

Robert Powell: We got about six minutes left, I'd like to open up to questions from the audience. We have a microphone. Right behind you.

Audience: Thank you. My question has to do with real estate, and the implications, Roger, you had mentioned that your age cohort may actually migrate from the urban areas to the suburbs, but do they want to buy a single family house? And if they don't, what are the implications for people who have much of their wealth in their single family homes?

Roger Ma: I think the people that I work with, still one of their primary goals is, should I buy a home or I do want to buy a home. And so, I think what I mentioned in terms of the self driving car, I think it just gives them the flexibility. I mean especially if you want to be in a densely populated area, the price are typically higher, and it's not necessarily should I buy a home, it's can I, can I afford to? But, I think self driving cars gives people that flexibility to say, I don't have to live in Chelsea or the Upper West Side. I can afford to go to Long Island or Westchester, maybe get still feel like there's less friction for me to get into the City. And so, I think that's an interesting dynamic that I think will be interesting to watch.

Bruce Wolfe: I can chime in on a personal level, so we lived in Westchester for 18, 19 years, sold our house last year, we were super fortunate that we were able to kind of sell it very quickly and all good. I am the exception to the rule. Our view, and we live in a fairly attractive town, good school systems, all that kind of stuff. People do not want to buy big houses anymore. Somebody gave me a statistic, somebody that I know, so I was living in Chappaqua and I was talking to a friend of mine, and he had said that there were no homes that had been sold over 2, 2.5 million dollars. Again, these are very expensive homes, in the last four years. Now, I'm not sure if that's right, but even directionally that's huge. We have many friends that are trying to sell their homes and are having big issues and they're not 2, 2.5 million dollar homes, but having huge issues.

Bruce Wolfe: Our view is, this generation of folks don't want big homes, don't want to have to deal with big homes, don't want property. I think our generation, it was sort of affirmation that you'd made it when you were able to buy a home, right, have your own house, and this that and the other. I think that is just an affliction or an attribute to a prior generation.

Roger Ma: I think that when you buy a smaller home, it has many benefits. Not only that it's lower upfront costs, but you have to spend less amount of money on furniture. It takes less effort to clean, or if you outsource it, it costs less as well. And the ongoing cost of heating or cooling is less as well. So many benefits to having a smaller home.

Robert Powell: Sell now or turn it into an Airbnb, I think is the ... Ken, want to come up. Do you mind waiting for a second, so we get you on mic. Thanks.

Audience: This question is for Bruce, Ed has spoken about life insurance as a method of investment and taking out money. I'd always read and heard that life insurance should just be used for life insurance. And that it should be used in other forms for investment or retirement money. I think he was alluding to whole life, I guess that's called. Somebody wrote in one of those books, I think the Vanguard guy, Bogel, had written something along the lines of, the reason they call it whole life is there's a big hole, and the money goes down in the hole never to be seen again. So, I'm little confused as to what I've read versus what he kind of described. I have term life insurance, if I die, my kids will be taken care of, can you comment on that.

Bruce Wolfe: I'll comment a little bit and then let Roger, 'cause Roger probably deals with it on a more day to day basis. Yeah, I'm personally not familiar with people viewing life insurance in those terms. I view it more in its traditional sense.

Bruce Wolfe: I think what will be very interesting is, can the insurance industry start to develop products that are more lifecycle structured. What I mean by that is, when you're younger you need life insurance, right, to protect you from premature death. But, at some point that goes away, and the opposite occurs, right? Which is, now I need to make sure I'll have income for as long as I live, which will probably be longer than most people perceive.

Bruce Wolfe: So, what I would envision, or hope that will happen is the insurance industry will start to create insurance products that actually to that, and transition. So, if you use a hypothetical, you're like 100% life insurance, but then as you move into your 40s and your 50s and 60s, right, some of that money would start to go towards some type of guaranteed life term products, so it can be some type of annuity structure, a deferred annuity that will provide lifetime protection as you get older. So, by the time you get to say 70, if you had a $100 initially in a life insurance product, now maybe you have 90 in this guaranteed life product, lifetime income product, and 10 still in the life insurance product, right? I think that's more of where the industry is got to go. But, I'm not too familiar with ... I mean, I know whole life but yeah.

Roger Ma: For the most part I'm a follower of Jack Bogel's advice, and so for my clients, most of the time it is separating those two. We find that most efficient, and in very rare instances would I recommend a whole life policy.

Robert Powell: I'll put an end cap on it and then we'll take a break. In my experience about writing about retirement since 2003 is that there's been a great deal of research that's been done on old things and new ways of using them. One example I'll give is, 10 years ago when reverse mortgages came out, there wasn't a financial planner I talked to who'd ever recommend one, right? Those are only for poor people, they would tell me. Fast forward 10 years later, some of the leading researchers, financial planners, researchers, have done research and said, "You know, here's how we can use them."

Robert Powell: We sequence of return risk, we want to avoid that, so we're going to take a reverse mortgage out at age 62 with a line of credit. And, we'll put from that in a declining market, and we'll replenish it later when the market goes back up. But, 10 years ago there was no research to support that as a tactic. I think what we're witnessing now is Ed's work, other people's work is saying, we have all these tools in the chest, right? We didn't have an HSA 10 years ago, we didn't have a Roth 10 years ago, right? So now we have all these tools, what's the best way to implement them, and for which fact pattern, right? The problem that Ed mentioned with annuities I think, is they get misused, right? But, there is a use and value for them, it just has to be for the appropriate fact pattern, I think. Same with reverse mortgages, same with whole life insurance.

Robert Powell: We're going to stop here, I want to thank Roger, Jack, and Bruce for being with us.

Bruce Wolfe: You're welcome.

Robert Powell: We're going to take a short break and be back here at 11:05. So, thank you.

What does the retirement of tomorrow look like? As our culture and our way of life changes, so should our plans for our financial future.

Will you sell your home or turn it into an income-producing Airbnb? Will you need in-home assistance, or will your medicine and meals be delivered?  There are so many questions and so many trends that will revolutionize the way Americans retiree in the future.

And, so, it's no surprise that it was one of the topics at TheStreet's Retirement, Taxes & Income Strategies Symposium held recently in New York City.

Sixteen of the top retirement experts joined Retirement Daily editor, Robert "Mr. Retirement" Powell, for the day long event. 

Watch the video above as Bruce Wolfe, Principal at C.S. Wolfe & Associates, Roger Ma, Founder of lifelaidout and Jack VanDerhei, Director of Research, Employee Benefit Research Institute join Powell to discuss the future of retirement.

Related. How to Pay Less Taxes in Retirement

Need help preparing for retirement? Check out Retirement Daily.