There is a prominent and growing group of people who believe that the exponential pace of technological progress will have a profound near-term impact on society. Singularity is a term often associated with this school of thought.
Singularity advocates believe that relentless acceleration in the power and speed of technology will result in a dramatic point of departure in the relatively near-term which will render a future society that is entirely different from what we experience today.
Chief among the potential effects of the Singularity is the notion of dramatically expanded human life-spans or longevity.
One of the Singularity’s most eloquent and outspoken advocates, Ray Kurzweil, was quoted as follows in a recent New York Times article:
“We will transcend all of the limitations of our biology,” says Raymond Kurzweil, the inventor and businessman who is the Singularity’s most ubiquitous spokesman and boasts that he intends to live for hundreds of years and resurrect the dead, including his own father. “That is what it means to be human — to extend who we are.”
The Singularity is not some sort of fringe futurist movement. The scenarios are based on rigorous analysis, and the people involved are some of the most well respected technologists and business leaders in the world.
While thought-provoking and entertaining, the possibility of something remotely similar to the Singularity occurring over the next few decades also presents some practical and potentially actionable considerations:
- First, it might be wise to assign some level of probability—however low—to a scenario in which retirement lasts a very, very long time.
- Next, think about how this “outlier” longevity scenario would be financed (hint: it’s not through a 4 percent draw-down of your accumulated financial assets). Longevity risk could prove to be the sleeper risk of the century, and at the moment the single best way to mitigate this risk is through the purchase of an annuity.
- An annuity purchase—particularly longevity annuities—could prove to be the wisest and most important financial decision anyone is able to make during their life-time.
- The window for acting on this information may be short. To my knowledge, most insurance companies have not incorporated Singularity scenarios into their annuity pricing. This could change if the Singularity longevity predictions continue to play-out over the next decade.
- Exponential change of any type is likely to catch most people—insurance companies included—by surprise. Credit risk and the potential health of annuity issuing insurance companies is a real concern if structural or systemic changes in the nature of human longevity overwhelms the financial system’s capacity to finance that risk.
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