Retirement saving in a steady-state world

An idea I got from thoughtful but radical environmental web sites is that we have already made the transition to a steady state world (or worse when the petroleum depletion becomes more rapid).

In a steady-state world compounding interest is impossible. Mathematically, no part can grow exponentially while the whole itself does not. Average investment interest can no more than match average currency debasement (inflation).

Assuming we actually are in a steady state world strongly affects one's retirement savings strategy. A simplified model illustrates the consequences for you : Break an adult earning life into four 15-year parts, 25-40, 40-55, 55-70, 70-85. The first three parts are the saving parts, and the last part the retirement part. Assuming constant income throughout, in the first three parts you save 1/4 of your income leaving 3/4 to spend. That leaves you the same 3/4 for your retirement years, i.e. constant spending throughout life.

Wow, I am really lucky! With my employer's contribution I've only saved 15%/year (plus social security, maybe 11%), total equal 26%/year. But I've lived in an expanding economy so my stock plan actually grew in real dollars.