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Longevity Planning

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CFP_Cathie2If you can tell us when you are going to die, we can provide an exact plan on how to spend down your money. The problem is obvious; we don’t know how long we will live. Longevity planning is a difficult part of our financial goal planning process. For anyone who has been through our Discovery Process, you know we ask about it and talk about it. The results of that conversation are often more revealing about your fears than your years.

We understand that you do not want to live to an elderly age that results in a diminished quality of life. However, we are not going to put you on an ice floe and push. A clear majority of our interviews result in the expression that “you don’t want to live that long” when we start talking about living into your 90s. We have to fall back on statistics and actuarial projections. As a result, we are thinking about adding a new tool to our toolbox to help the conversation on longevity.

According to the CDC website, the average life expectancy in the U.S. is 78.8 years. The joke around our office, filled with financial experts, is that this is not the age at which we drop dead. It is only the average. In addition, longevity tables account for a longer life span if we manage to live through the early years. A USA Today report notes that a 65 year old today can expect to live another 19.3 years. Men have also been closing the gap on women, but women still live longer on average. I recently heard the statistic that annuity companies project by the year 2028, 50% of married couples will have one spouse live past age 95. Today that statistic is 43%, so we are quickly heading to a majority. This has major implications on your financial goal planning.

If one of your biggest fears in retirement planning is running out of money before you die, then we better do our best together to estimate your life span. Along comes a website: https://www.livingto100.com. Our challenge to you is to try it out and let us know the results so we can update your planning with the data. Responses around the office include: “But I don’t want to live to 96!” “Interesting! Says my life expectancy is 92…. Wouldn’t that be cool?!” Personally, I was surprised by the feedback printout at the end. Not sure I agree with everything noted, but it made me chuckle when it said if I improve in certain areas, I can live to 101! If you are comfortable sending me your reaction to the calculator, I would love to hear it.

Living longer than we originally estimated may have implications on your planning, but it is not all about success and failure. If you have entered into a financial planning engagement with us, you know that we state this plan expires after one year due to changing circumstances both within and beyond our/your control. We work with the best information on hand to provide you with financially sound advice to plan for your future and we update it along the way. Now about that fear of living beyond the point of life quality, stay tuned for a future blog on living well in retirement.

Cathie Straub, CPA, CFP®
Director, APCM Wealth Management for Individuals

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