An insightful article on kiplinger.com explores how the Age of Longevity challenges traditional approaches to financial planning and retirement. With many people living longer, retirement plans now need to address not only money but also health, relationships, and meaningful activities. This new longevity mindset requires a proactive approach to ensure both financial security and life satisfaction.
Planning for a Longer Life in the Age of Longevity
Today’s retirees face the reality of longer lifespans, but with those extra years come opportunities and challenges. For Doreen Deleon, an 86-year-old businesswoman and grandmother, the concept of living well past her expectations was unfamiliar. “I never thought about it,” she admits, having surpassed her mother’s age at death by over 40 years.
The Age of Longevity demands a shift in how people view aging. Deleon’s financial health is secure, and her vibrant lifestyle includes a walking routine that helped her eliminate blood pressure medication. She consults with her children in managing their family business, maintains close ties with friends, and even recites poetry for fun. For retirees like Deleon, the question isn’t just about how long they’ll live but how to best use that time.
Longevity Risk and the Role of Financial Literacy
Many retirees underestimate how long they might live, a phenomenon known as “survival pessimism.” According to Gal Wettstein of Boston College’s Center for Retirement Research, this lack of “longevity literacy” can lead to poor decisions about Social Security, long-term care, and savings withdrawals. Tools like the Social Security Life Expectancy Calculator can help retirees assess their likely lifespan and plan accordingly.
A study from the TIAA Institute found that strong longevity literacy correlates with better financial outcomes. Yet many people avoid thinking about aging and its financial implications. Understanding risks like outliving your assets, inflation’s impact, and long-term care costs is essential for a resilient plan.
Age of Longevity: Actionable Steps for Thriving in Retirement
1. Evaluate Your Housing Strategy
Your home is likely one of your biggest assets, but it can also be a financial drain. Assess ongoing costs like property taxes, maintenance, and repairs. While aging in place may appeal now, consider how future needs like in-home care or transportation might alter that decision.
2. Reconsider Investment Growth
Traditional retirement planning often avoided risk, but high inflation has highlighted the need for growth. Accepting some investment risk can protect against inflation and ensure a stable income in later years.
3. Plan for Long-Term Care
With the cost of assisted living averaging $5,511 per month in 2024, understanding your options is crucial. Explore innovative senior housing solutions or consult an eldercare attorney for strategies to manage potential expenses.
4. Maximize Social Security
Delaying Social Security until age 70 can significantly increase benefits. For couples, strategic claiming options based on one spouse’s earnings history may maximize payouts.
5. Address Gender-Specific Challenges
Women often face unique retirement challenges due to lower lifetime earnings and longer life expectancy. To mitigate this, women should aim to maintain a diversified portfolio and prioritize steady income streams over cash holdings.
A New Perspective on Aging
As retirees adapt to the realities of longer lifespans, planning for longevity involves more than making money last. It’s about crafting a fulfilling, active, and secure life. Cindy Ireland Barton, for instance, tackled both practical needs, like retrofitting her home for safety, and personal aspirations, such as writing novels to stay mentally sharp.
Ultimately, longevity planning is about aligning your financial resources with your values and dreams. As Deleon aptly states, “How I spend my time is the most important thing.”
