- People today take better care of their bodies than past generations, so they live longer.
- Dementia typically starts in the 70s, and as more people live that long, more will suffer dementia.
- Retirement plans have largely replaced pensions with a lump sum. If one lives long, the savings may run out.
The dangers of getting old have long been known. Most obviously, the probability of imminent death increases year by year. (Imminent as opposed to eventual, because the best estimate of eventual death remains constant at 100%.) One loses physical strength, the senses get weaker leaving one more vulnerable to blunders and dangers, and so on.
But just in the past couple decades, aging has developed two new dangers. Both have only emerged as a result of fundamental changes in society. In a nutshell, the two new threats are outliving your money, and outliving your brain.
Let’s start with the brain. The sheer number of people with dementia (including Alzheimer's) has skyrocketed in the past half-century. My father ended up like that: He lived for a half-dozen years unable to have a simple conversation, mostly remaining silent, just smiling, no understanding of his life. He died at 94. His body lasted longer than his brain. Part of that was due to his taking regular exercise starting in his early 50s.
A huge change in the Western world, and coming along elsewhere, too, is that people take better care of their bodies than in the past. In the early 1960s, jogging had not entered the culture, while smoking cigarettes was normal, and plenty of alcohol was consumed, too. People used to typically reach 50 not having had regular exercise since high school, and with many years of cigarette and alcohol damage, they started dying off fairly early. Relative to today, fewer made it to 70.
Alzheimer's cases tend to start during a person's 70s. When most people died before 70, only a small and unfortunate minority got dementia. But now that people take better care of their bodies, such that increasing numbers manage to live until 90 or 100, dementia will claim larger and larger numbers.
That’s what I mean by outliving your brain. It seems that the average brain starts to deteriorate seriously as it plows through its seventy-something birthdays. After a while, it’s just mush—figuratively speaking. If you take good care of your body so it can live more than eight decades, you enter into the red zone in which your body has outlived your brain.
The other danger is outliving your money. Some people have guaranteed pensions, but for more of us, retirement is mainly financed by our savings (along with some helpful checks from the government, and anything you happen to inherit). This was a big change that occurred around the time I got into academia; people older than myself are guaranteed to get sent money as long as they live—and many (not all) of my European colleagues, even younger ones, still have the promise of a lifelong pension. But the new plan is that you save for retirement and your employer also puts money into a fund for you—and that’s all. When you retire, you get whatever the savings add up to, and that’s it. If you run through it fast, there’s nothing more coming, and you’ll be poor.
That’s what I mean by outliving your money. If you retire with a lump sum, your future lifestyle will depend on how much income that earns, plus whatever you spend out of the lump sum itself (the “principal”). Ideally you would live on the interest payments and never reduce the lump sum itself. (If you reduce it, next year you have a smaller lump sum and so the interest payments will be lower.) If your lump sum gets too small, you have outlived your money.