“You’re not getting old; you’re getting ready.”
-Ernestine Shepherd, the world’s oldest female competitive bodybuilder.
The CDC calculates that overall life expectancy in the U.S. is presently 78.7 years, with women outliving men by an average of 5 years or 81 years vs. 76 for men.
Some of the reasons for the increase in life expectancy include:
- Advances in healthcare. Deaths from major diseases, such as cancer, heart disease, and stroke are on the decline, and diseases such as diabetes can be managed more successfully than 20 or 30 years ago.
- Health-conscious habits. More senior citizens are prioritizing their health by remaining active, eating right, and taking supplements. Fewer adults over age 25 are smoking cigarettes.
The Longer You’ve Lived, the Longer You can Expect to Live!
The life expectancy ages are actually misleading, as they represent averages that include the few who pass away at younger ages. For those who have already reached their 60’s and 70’s, life expectancy is longer still. According to data compiled by the Social Security Administration and the American Academy of Actuaries:
- A non-smoking man who has reached 84 is likely to live long enough to celebrate his 92nd birthday.
- A non-smoking woman who is 86 or 87 will live to an average of age 95!
We think that the longevity trend is very good news – especially given the alternative! However, it does represent a tremendous challenge if Americans plan to retire at age 65 with inadequate savings.
As the longevity trend continues, one thing remains clear: we have to re-think the whole concept of retirement and living a lengthy and productive life.
The Social Security Act was passed in 1935. At that time, the average life expectancy was 61.7 years, so it probably seemed logical to set the arbitrary retirement age at 65. However, with a realistic expectation of living beyond 80, it is important to rethink when or if to retire and what the perfect retirement looks like for you!
The Challenges Of Living Longer
In some financial circles, increased life expectancy is seen as being more of a “risk factor” than an advantage. The U.S. Census Bureau reports that half of U.S. workers have no private pensions and one-third of Americans have set aside no savings for retirement. And among those receiving Social Security benefits, a third rely on that monthly check for 90% or more of their incomes.
As of late 2014, the average benefit was just below $1300, which is clearly not enough for most people to live on! If a senior needs assisted living, they can expect to pay $4,000 or more per month in most areas of the country.
Then there is the issue of “retirement plans.” If you have a traditional pension, IRA or 401k plan in place and you originally planned on retiring at 65, it may not be adequate to last two or more decades. Even if your savings have been calculated to account for inflation, it has been shown that the Consumer Price Index cost-of-living calculations do NOT keep pace with real-world inflation.
Even if typical retirement plans are becoming less viable, we can start by saving more – we recommend 20% – and we can also reframe our expectations. Beginning retirement at 75 or 80 gives us 10-15 more years of earning and saving.
Creating A Model That Works For You
By deferring retirement, changing careers, or working part-time, you can not only put away additional savings but also enjoy continued growth, and personal fulfillment well past age 65.
Explore New Possibilities and Know Your Options
Let us help you put together a strategy that ensures a stress-free retirement. Please give us a call at 574-234-1980 or visit our website at neeserinsurance.com.
©Prosperity Economics Movement
