Happy couple running on beach have planned for how long you'll live in retirementIf you shake your head and laugh at the thought of living to 100 or older, it’s time to reconsider how long you’ll live in retirement. According to the Social Security Administration, almost a quarter of all 65-year old Americans will go on to live beyond 90, and 10% will live beyond 95 [1].

People are living longer – and that costs money. If you don’t plan ahead financially, living longer may also mean living leaner. Here’s what to think about when considering how long you’ll live in retirement. 

Health And Life Expectancy

Healthful living is fundamental to life expectancy. While family background and ethnicity [2] can impact longevity, basing your life expectancy on your family’s health history may not be wise. Medical advancements are continuously extending life expectancy through preventative medicine, new pharmaceutical options, and increasingly common life-extending procedures. Personalized healthcare may also help you live longer and healthier, with predictive and preventative options like genomic mapping to preemptively identify hereditary disease, and pharmacogenomics to tailor treatment to your unique genetic makeup.

Health And Wealth

If you’re healthy and wealthy, you’ll probably exceed average life expectancy. There’s a direct correlation between lifespan and wealth [3], meaning that the more affluent you are, the more likely you’ll live longer. Wealth extends life expectancy in many ways; some obvious, like access to better healthcare or living in a safer neighborhood; others less obvious e.g., eating a better diet, or even driving a safer car.

With healthcare costs a key expense for most Americans, your health should always be an important financial focus, regardless of age.

  • Review your health, disability, and other employer insurance benefits before changing jobs. Loss of coverage could leave you and your family financially vulnerable.
  • Medicare provides health insurance for individuals aged 65+. If you retire early, you’ll need interim coverage, which can be costly as you near retirement.
  • Factor out-of-pocket health expenses like copays, deductibles, and supplemental insurance into your retirement budget. Also, be aware that dental procedures are seldom covered by health insurance, even Medicare.
  • Consider long-term care insurance to support your health and wellbeing as you age.

Gender

Women outlive men by an average of five years [4]. They also typically earn less over their lifetime, due to lower paying careers, wage inequality, and time spent caring for children or aging parents (often simultaneously – the so-called ‘Sandwich Generation’). The resulting lower retirement savings and Social Security benefits must nonetheless be spread over a longer lifespan. As a top-ranked, woman-owned wealth manager, SageVest recognizes that planning financially for a long life is particularly important for women.

Relationship Status

According to an 80-year-long Harvard research project, close relationships surmount IQ, class, and even genes in predicting life expectancy [5]. For couples, financial planning isn’t just about you. You also need to consider your surviving spouse e.g., which benefits they’ll retain or lose. Entering a relationship later in life involves additional wealth complexities and considerations, including those specific to how long you’ll live in retirement.

Activity Level

Staying active goes hand-in-hand with living longer [6], but it can also cost more.

  • One common reason that people are working longer is to remain mentally active [7], a factor that contributes towards longevity. Staying employed is also financially advantageous, with increased Social Security and pension payouts, more savings, etc.
  • When you plan to retire versus when you actually retire may vary significantly. A recent study found that those who plan to work longer, and those who anticipate retiring early, typically retire around the same age i.e., at 61 years of age [8]. This can have a meaningful impact on your retirement outlook. SageVest embeds ‘what if’ scenarios’ into your personalized retirement projections to account for changing life goals.
  • The belief that spending declines in retirement is a common retirement myth. The Wall Street Journal recently found that most individuals spend 130% of what they spent while working [9]. This is due to having extra time on your hands during the day, health care costs, and other variables. Your financial plans must consider how long you’ll live in retirement and how much you’ll need to enjoy a happy, healthy, and successful retirement.

Emotional Wellbeing

Happiness improves your quality of life and helps you live longer [10]. Yet, after health and safety concerns, finances are the biggest source of anxiety for most people [11].

  • Learn how your relationship with money influences your spending and saving habits.
  • Simplify your finances by streamlining accounts, automating payments, and reducing debt. If your finances have grown too complex, consider working with an independent, fee-only advisor.
  • Money can be a stressor for many couples. Good communication, compromise, and equal engagement in wealth decisions helps foster personal and money harmony.
  • Encourage your kids to develop a healthy attitude to money.

Planning financially for how long you’ll live in retirement can help you enjoy a fulfilled lifestyle, both today and tomorrow. Our Retirement Resources Center will help you get a head-start, then contact us to find out how our customized, comprehensive wealth management services can help support a long and healthy lifestyle for you, both now and in the future.

References

[1] https://www.ssa.gov/planners/lifeexpectancy.html

[2] https://www.cdc.gov/nchs/data/hus/2017/015.pdf

[3] https://www.urban.org/sites/default/files/publication/49116/2000178-How-are-Income-and-Wealth-Linked-to-Health-and-Longevity.pdf

[4] https://www.cdc.gov/nchs/data/hus/2017/fig20.pdf

[5] https://news.harvard.edu/gazette/story/2017/04/over-nearly-80-years-harvard-study-has-been-showing-how-to-live-a-healthy-and-happy-life/

[6] http://time.com/5166564/physical-exercise-can-increase-lifespan/

[7] https://www.aarp.org/research/topics/economics/info-2018/multicultural-work-jobs.html?CMP=RDRCT-PRI-OTHER-WORKJOBS-052118

[8] https://www.morningstar.com/blog/2018/07/26/expected-retirement.html

[9] https://www.wsj.com/articles/how-much-money-will-you-really-spend-in-retirement-probably-a-lot-more-than-you-think-1536026820

[10] http://www.pnas.org/content/pnas/early/2011/10/24/1110892108.full.pdf

[11] https://www.psychiatry.org/newsroom/apa-public-opinion-poll-annual-meeting-2018

Prepared by SageVest Wealth Management. Copyright 2019.

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