As we’ve discussed many times here, aging is definitely changing. And as a result, more and more people are intrigued with this new longevity and the possibility of living long. But can we, or should we really plan to live to 100 … and if so, how?
While longevity is truly one of, if not the biggest risk factor financially, there are definitely ways to prepare for it … the problem is, most people simply don’t. My personal belief is that while the majority like the idea of living long, they usually have no idea how to prepare for it financially. Being a Gerontologist who works in the financial space, I learned that it requires saving as much money as you possibly can, and ideally, utilizing a variety of tools … from long-term care insurance to annuities, and I own both.
Unfortunately, most people have had little, if any exposure to the financial aspects of planning for this new longevity. But as AIG (American International Group), one of the world’s largest insurance organizations celebrates 100 years, they’re encouraging others to plan for 100 years too. They found in their research that more than half of Americans surveyed said living to 100 was one of their goals. And according to their research, the chances of doing so are increasing. For example, there’s a nearly 1 in 3 chance a 65-year old female will live to 95; and a 1 in 5 chance a 65-year old male will live to 95. Additionally, while not part of the AIG study, the Social Security Administration states that 1 in 4 65-year old Americans can expect to live past 90; and a 10-year old child today has a 50% chance of living to 104.
When AIG asked Americans what they would do today to prepare if they knew they were going to live to 100, the majority of the answers revolved around finances … from working longer, investing more, start planning and saving early, paying off debt, and save, save, save! Yet there were also lifestyle aspects addressed like having better connections to friends, family and community, eating better, getting more exercise, and working on staying healthy to avoid future medical costs.
While most believe it’s more than just the money, it’s your life … it’s also becoming very clear to people that extended lifespans likely results in increased healthcare costs. And AIG’s survey confirmed this with the top 3 greatest worries people have about living to 100 being serious health problems, being a burden on family, and running out of money to live comfortably. Yet while the majority are concerned about these issues, most are knowingly not taking any, or enough steps to prepare financially for this possibility. In fact, most are not at all or only somewhat financially confident in their current retirement savings plan. In fact, AIG found that 59% of Americans surveyed fear running out of money more than death!
I have a lot of different thoughts about why more people don’t prepare financially for this new era of longevity – as much as they claim they’d like to. For starters, I believe we’re still a society that automatically associates longevity with increased health costs and problems. And while I totally get why people think that, I also know that the thought of declining health and paying for that doesn’t excite people to make the financial sacrifices often required to prepare for this possibility. But today’s variety of new financial products provide a lot of different options for people that can make a significant difference in helping them prepare to reduce fear.
Perhaps we need to focus more on life planning versus just financial and retirement planning in order to provide a more positive, all-encompassing approach to planning versus focusing primarily on the latter phase of life. If we were to look at a 100-year lifespan, think about how that changes the perception of aging and how we’d perhaps think about the entire life spectrum rather than just one specific phase of life. I’ve always believed that this new longevity provides an entirely new way to rethink all of our life phases … and ultimately, how to best plan and prepare for all of them.