The Great Recall Debacle of 2014 wasn’t the only thing impacting General Motor Company’s fourth quarter earnings. The Wall Street Journal recently reported that a revision of mortality assumptions – how long we’ll live – caused the company’s pension plan to be underfunded by more than $2 billion.
While this news might not impact you directly, longer life expectancies will. What does this mean for you?
New mortality rates now estimate that the average 65-year-old man today will live to be 86.6, and the average 65-year-old woman today will live to be 88.8. In short, people are living two to two and a half years longer, and it costs money.
Many US companies have moved away from traditional pension plan models, leaving most Americans to fund their own retirement through vehicles like 401(k)s and regular savings. But, just as GM and other pension plans are evaluating the impacts of a longer lifespan, we also need to re-examine our retirement nest eggs to assess if we’re financially prepared to live a longer and more active life than we may have anticipated.
If you’re one of the many people who shake your head and laugh when you think about living to 100 or beyond, it’s time to realize that it’s a real possibility. Consider the following:
If you base your life expectancy upon medical conditions that impacted the lives of family members, those assumptions may no longer be valid in today’s medical age. Medical advancements are consistently increasing life expectancies. Time Magazine’s recent cover, titled “This Baby Could Live To Be 142 Years Old”, highlights the potential magnitude of advancements over time.
Beyond the averages, you should consider if you are representative of the “average American”. The reality is that if you eat a healthy diet, exercise, regularly visit the doctor, and live in a safe environment, you might already be on track to exceed the averages.
People are not only living longer, they are enjoying active lives for longer than they ever anticipated. That requires sufficient financial resources.
SageVest Wealth Management believes that life fulfillment is important at all ages. Proper planning can help to ensure your ability to enjoy your wealth today, and hopefully (and now, with greater probability), for many years to come.
We encourage you to CONTACT US with questions on this and other retirement topics.
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