L. Stephen Coles, M.D., Ph.D., Lecturer,

UCLA Molecular Biology Institute

Department of Chemistry and Biochemistry

Los Angeles, California; USA

How Global Demographics & Monetary Policies are

Affecting the World’s Retirement SystemsSupercentenarian Longevity: Secrets of the Oldest Old

Sean Connery

British scientists analyzed the vast amounts of EtOH consumed

by superspy James Bond, 007, in Ian Fleming’s novels and

concluded that he would contract alcoholic hepatitis, cirrhosis,

impotence, and die of liver disease by the age of 56 years.

Arnold Schwarzenegger, former Governor of California

Clint Eastwood

The Phenotype of Aging

Tom Cruise

Elizabeth Taylor

Women Are No Exception to the Rule

Bridget Bardot, now 79+

Raquel Welch, now 73+

Cher

Lisa Gherardini (who died in 1542 AD) suggested as a model for Leonardo da Vinci’s “Mona

Lisa” (“La Gioconda”)(Louvre Museum; Paris, FRANCE)

Archeologists have now unearthed a skeleton in a monastery in Florence, ITALY and will do

DNA analysis to confirm identity

Marathon in Hamburg, Germany (May 2014)

But Some Age Better Than Others –

Record Marathon Times

We’re Getting Old — Very Old

• Population aging is a world-wide phenomenon

• Over next several decades, the proportion of elderly persons (65+) in all major industrial countries will increase rapidly as the share of the total adult population declines

• For example, in the U.S., there were

• 35 million adults age 65+ in 2000

• 50 million in 2010

• 70 million, or 1 in 5 Americans, in 2030

% Population Age 65+ [2000 – 2020]

Country 2000 2020 Percent Change,

2000–2020

Japan 17.1 26.2 53.7

Canada 12.8 18.2 42.9

Australia 12.1 16.8 39.2

New Zealand 11.6 15.6 33.7

United States 12.5 16.6 32.8

Germany 16.4 21.6 31.9

France 15.9 20.1 26.4

United Kingdom 16.0 19.8 23.6

Source: United Nations

% Population Age 65+ [2000 – 2020]

United States

United KingdomCanada

Australia

New Zealand

Germany

France

Japan

United States

United Kingdom

Canada

New Zealand

Germany

France

Japan

Australia

% Population Age 80+ [2000 – 2020]

Why Is That?We are having fewer children and living longer, much longer on the average

In fact, in 1889, the first Social Security Law was enacted in Germany by Prince Otto von Bismarck

(the "Iron Chancellor" under Kaiser Wilhelm, II), when those retiring at 65 had only a five (5)-year

life expectancy (on average) [and most workers died before they even could retire].

Life Expectancy by Country and Gender in 2000 and 2020

Country 2000 2020

Men Women Difference Men Women Difference

France 75.0 82.5 7.5 77.0 84.2 7.2

Japan 77.2 83.3 6.1 78.8 84.9 6.1

United States 74.2 80.6 6.4 76.8 82.6 5.8

Germany 74.7 80.7 6.0 77.0 82.7 5.7

Canada 76.6 82.3 5.8 78.4 84.0 5.7

Australia 76.0 81.6 5.7 78.0 83.4 5.5

New Zealand 74.9 80.5 5.6 77.2 82.5 5.3

United Kingdom 75.3 80.6 5.3 77.3 82.6 5.3

At Age 65, People Live, on Average, Another 15 to 22 Years

At Age 80, people live, on average, another 7 to 10 years

So What?• The social/economic implications of population aging in developed

countries are extremely serious

• Large effects on financial markets due to changes in saving rates and the demand for investment funds

• Also, significant changes in labor force

• As the median age of the world rises from 29 to 38 by 2050, the labor force will shrink and more people will retire, leaving fewer younger workers to sustain growth and sapping the vitality of economies all over the world

• Italy, for example, will need to raise retirement age to 77 or admit 2.2 million immigrants annually to maintain its worker-to-retiree ratio

Supercentenarians

Guinness Book of World Records

/

Who is a Supercentenarian?

• As of today (Thursday, June 19, 2014), there were 74 Validated Living Supercentenarians World Wide

(USA : non US = 22 : 52) (Female : Male = 72 : 2)!

• Once you were to make it to becoming a Supercentenarian, the chances of living even one more year to 111 is like flipping a coin! (H:T or a 50% mortality rate)

• Therefore, these individuals are a very precious resource for humanity, and we need to act quickly; otherwise, whatever they have to teach us about how they managed to live so long will be lost forever

The Oldest Documented Supercentenarian in History

40 years 120 years

According to the Guinness Book of World Records, the oldest documented Supercentenarian in history was French woman Madame Jeanne-Louise Calment, who died in 1997 at 122 years, 164 days

The Oldest Documented Supercentenarian in History:The Calment Limit

Supercentenarian Life Styles

Calment 122.4 Okawa 116 Mortensen 115.7 Barwis 113

Rectangularization of LongevityWhile Prof. James Fries’s “Compression of Morbidity" hypothesis may not be

entirely correct, there is a definite “Rectangularization” of the human longevity

curve, and it is becoming stronger with the passage of time

If we take Japanese centenarians as one example…

• In 1992, there were 3,000 centenarians; oldest person = 114 years

• In 1998, there were 10,000 centenarians; oldest person = 114 years

• In 2009, there were 40,000 centenarians; oldest person = 114 years

Rather than seeing an increase in the maximum ages, as expected, we are seeing

an increase in the mortality rates instead, especially at ages 112, 113, 114, and 115,

with very few persons anywhere reaching age 116 (last occurrence was 2006) and

age 117 or more turns out to be an extreme outlier (last occurrence was in 1997)

Country Age

France 122(While Jeanne Calment reached age 122, she definitely was not walking around at age 120)

UK 115 (The oldest British person since modern birth registration began in 1837)

Spain 114

Italy 114

Sweden 113

Oldest by Country

1. Christopher Driver, “Opinion: A Further Comment on Why the Gompertz Plot Does Not Measure Aging” Biogerontology, Vol. 4, pp. 325-7 (2003).

2. James R. Carey, et al., “Slowing of Mortality Rates at Older Ages in Large Medfly Cohorts,” Science Vol. 258, No. 5081, pp. 457-61 (1992).

Mortality Plateau for Fruit Flies

Is There a Mortality Plateau?

(Oxford University Press, New York; 2011) Figure 11-2; p. 134

Supercentenarian Mortality Rates

Data provided by Messrs. Robert D. Young of Atlanta GA and Mark E. Muir of Virginia, GRG Database Administrators

Hypothesis: Nature, Not Nurture Causes Aging & Senescence

• Potential Longevity (Both Average Life Expectancy & Maximum Lifespan) Lies in

the expression of our genes (including Epigenetics)

• Longevity-Determining Genes (a few hundred genes out of 20,000+/-) & not our

environment or life-style dictate how long we may be able to live

• None of our Supercentenarians took supplements

• Our greatest system vulnerability is vascular fragility (we have

~60,000 miles of blood vessels)

Instantaneous Mortality Rate(Gompertz’s Law for Actuaries)

Instantaneous Mortality Rate(Gompertz’s Law for Actuaries)

Female Advantage

Female:Male Overall Ratio ~10:1. And by age

• 110 Years 90 percent are women

• 112 Years 92 percent are women

• 115 Years 95 percent are women

Why is that?

1. Women Deliver Babies (C-Sections)

2. Men Fight for Species Survival (T, Cortisol)

3. Estrogen? (Post Menopausal > ½ Life)

4. “XX” (Mosaic) and not “XY” (Y = tiny)

Supercentenarian Genome Project(IRB approval July 2010)

The SRF in collaboration with…

• UCLA (Dept. of Chemistry and Biochemistry Molecular Biology Institute)

• Stanford University (Depts. of Developmental Biology and Human Genetics)

• Institute for Systems Biology of Seattle, WA

• Complete Genomics of Mountain View, CA

Two Subjects from San Diego, CASoledad Mexia, 114 years [1899 - 2013]

&Frederica Maas, 111 years [1900 – 2012]

Soledad Mexia, 112 years

Chula Vista, CA; June 30, 2012 Hinco Gierman, Ph.D.; July 1, 2012

Marion Higgins of California, 112 years &

Maria Capovilla of Ecuador, 116 years

Delma Kollar of with Granddaughter Syd Bergeson114 years

Creswell, OR [10/31/1897 – 01/24/2012]

Besse Cooper, 115th Birthday Party[Aug. 26, 1896 - Dec. 4, 2012] 116 years,100 days

Mississippi (Sweetie) Winn & Great Niece, Mary Hollins

113 yearsShreveport, LA [1897 - 2011]

Germaine Degueldre of BELGIUM111 years

[September 26, 1900 - May 11, 2012]

Marie-Therese Bardet of FRANCE112 years

Died: June 8,2012 at age 114

Walter BreuningWorld’s Oldest Man - 114 years

Great Falls, MT [1896 - 2011]

Mansoor Pazargad of IRAN 113 years

[1896 - 2011]

Jan Goossenaerts of Belgium111 years[1900 - 2012]

Mrs. Elsie Thompson112 years

Died March 21, 2013; 113 years, 350 daysClearwater, FL

Beulah Christie110 years

Melbourne, FL; died at 111 years

Antonia Gerena-Rivera110 years

Miami, FL (Born in Puerto Rico)

(Insert Photo from Visit on Sunday, May 1, 2011, 4:00 PM EDT)

Maria Gomes Valentim114 years Carangola, Minas

Gerais, Brazil [1896 - 2011]

Avice Clarke111 years

Placerville, CA , Born in England [05/17/1900 - 01/17/2012]

Mr. James F. McCoubrey111 years

[1901 - 2013]St. John’s, Newfoundland; Halifax, Nova Scotia;

Cambridge, MA; Walnut Creek, CA

Dominga Loera Velasco111 years

Born: May 12, 1901; Oakland, CA

Marriage to Salvador in 1928

Dr. Alexander Imich, Ph.D.111 years

Born in Poland & Resided in NYC(Confirmed as World’s Oldest Man – May 12, 2014)

[February 4, 1903 – June 15, 2014]

The Cost of DNA Sequencing is Falling

2000 $3 Billion (Shot-Gun of a Mosaic)

2005 $100 Million (Craig Venter, James Watson)

2010 $1 Million

2011 $200 K (George Church at Harvard)

2012 $4 K

2013 $1,000 (Illumina)

2015 $200 (nearly all newborns will be sequenced)

Cost of DNA Sequencing Falls

Average Life Expectancy (years)

Argument: What if Ray Kurzweil is right?

Era Life Expectancy (years)

1. 100 KYA (Hunter/Gatherers) 18

2. 5 KYA (Ancient Egypt) 25

3. 1400 AD (Middle Ages) 30

4. 1800 (USA) 37

5. 1900 (USA) 49

6. 2000 (USA) 78

7. 2045 (Singularity) Biological Escape Velocity

L. Stephen Coles, M.D., Ph.D., Lecturer,

UCLA Molecular Biology Institute

Department of Chemistry and Biochemistry

Los Angeles, California; USA

How Global Demographics & Monetary Policies are

Affecting the World’s Retirement SystemsSupercentenarian Longevity: Secrets of the Oldest Old

Robert C. Merton

School of Management Distinguished Professor of Finance

MIT Sloan School of Management

How Global Demographics and Monetary

Policies are Affecting the World’s

Retirement Systems: Interest Rate Risk

Effect of Interest Rate Level on Retirement FundingPrice of $100,000 per year Inflation-Protected Life Annuity Beginning at Age 65

1.2

1.3

1.4

1.5

1.6

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1.9

22

.1

An

nu

ity P

rice (

$ m

illio

ns)

-1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%Real Interest Rate

1 1

11

TA

r r

65

Effect of Interest Rate Level on Retirement

Funding

Price of $100,000 per year Inflation-Protected Life

Annuity Beginning at Age 65Present Value of Annuity ($ millions)

Real Interest Rate

Current Age 4.13% 1.50%Difference in

Cost (%) 0.50%Difference in

Cost (%)

65 $1.30 $1.64 26% $1.81 10%

60 $1.06 $1.52 44% $1.76 16%

55 $0.87 $1.42 63% $1.72 22%

50 $0.71 $1.31 86% $1.68 28%

45 $0.58 $1.22 111% $1.64 34%

66

Effect of Interest Rate Level on Retirement Funding

Price of $100,000 per year Inflation-Protected Life Annuity Beginning at Age 65

4.1% 0.62 0.69 0.72 0.79 0.87 1.00

2.5% 0.71 0.79 0.83 0.91 1.00 1.15

Interest Rate R

1.5% 0.78 0.86 0.91 1.00 1.10 1.26

0.5% 0.86 0.95 1.00 1.10 1.21 1.39

0.0% 0.90 1.00 1.05 1.16 1.27 1.46

-1.0% 1.00 1.11 1.16 1.28 1.40 1.62

-1.0% 0.0% 0.5% 1.5% 2.5% 4.1%

Interest Rate r

Annuity Price at Interest Rate RRatio:

Annuity Price at Interest Rate r

67

30-year UST TIPS Interest Rates 2007 -2014

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

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Yie

ld (

%)

30-year TIPS Bond Yield

30-year 3-5/8% 2028 TIPS 30-year TIPS, constant maturity

68

Wrong Risk Measure: Retirement Funding has an Income Goal But DC Investing Focuses on Wealth Accumulation

69

Deferred Real Annuity monthly returns

Annuity returns based on yield from US Treasury Inflation Protected Securities (TIPS). Data provided by Bloomberg.

Deferred Annuity: High risk in wealth terms, low risk in income terms

DEFERRED ANNUITY (INCOME UNITS)DEFERRED ANNUITY (USD)

-20%

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0%

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2/03 12/0310/04 8/05 6/06 4/07 2/08 12/0810/09 8/10 6/11 4/12

Retu

rns

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2/03 12/0310/04 8/05 6/06 4/07 2/08 12/0810/09 8/10 6/11 4/12

Retu

rns

Months

The volatility of annuity price is high risk when measured

in terms of asset value.

The volatility of annuity price is minimum risk

when measured in terms of income

Wrong Risk Measure: Retirement Funding has an Income Goal But DC Investing Focuses on Wealth Accumulation

70

90-Day US T-bill monthly returns

Based on T-bill data provided by Bloomberg. Past performance is no guarantee of future results.

US T-Bill : Wealth preservation does not mean income preservation.

3-MONTH US T-BILL (INCOME UNITS)3-MONTH US T-BILL (USD)

-20%

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2/03 12/0310/04 8/05 6/06 4/07 2/08 12/0810/09 8/10 6/11 4/12

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rns

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2/03 12/0310/04 8/05 6/06 4/07 2/08 12/0810/09 8/10 6/11 4/12

Retu

rns

Months

The volatility US T-bill price is minimum risk when measured

in terms of asset value. The volatility of US T-bill price is high risk when

measured in terms of income.

Robert C. Merton

School of Management Distinguished Professor of Finance

MIT Sloan School of Management

How Global Demographics and Monetary

Policies are Affecting the World’s

Retirement Systems: Interest Rate Risk