The main premise of SuperAging is that, at age 65, you could easily have 20 or 30 years of lifespan still ahead of you — maybe even more. What will you do with that extra time?
In the book, we offered a lot of statistics to support that premise. It’s encouraging to see that the same arguments — and even more robust statistics — are actively being used among financial advisors. This article should be must reading.
It’s written by — and for — financial advisors. It argues that projections of increased longevity are not only reasonable, but may in fact be too conservative.
“Centenarians are becoming more and more common,” the article points out. “There are approximately 90,000 people in the U.S. who are over the age of 100, double the number in 2008. In stark contrast, headline life expectancy has fallen to 76 due to COVID-19 and other factors (technically, this is period life expectancy at birth). How should advisors make sense of these seemingly contradictory trends? How long should they plan for the clients to live?”
The authors present a longevity estimate for a healthy 65-year-old retired couple, showing the probability of the last survivor to reach various ages:
- There’s a 90% chance that the last survivor will live to 83 (low-end estimate) or 85 (high-end estimate)
- There’s a 75% chance that the last survivor will reach age 88 (low-end estimate) or 90 (high-end estimate)
- There’s a 50% chance the numbers will be 93 to 95
- There’s a 25% chance the numbers will be 97 to 99
- There’s even a 10% chance the numbers will be 100 to 102
The authors conclude:
- Planning to 90 is not conservative
- A single, fixed time horizon is likely to be wrong: “The low-end estimates indicate that 10% of 65-year-old couples won’t survive a 20-year time horizon, but another 10% will see one member live beyond 100, a 35-year time horizon
The article goes on to present other models, including actuarial calculations. It’s a fascinating exercise and we urge you to read it. What’s important for us — in the context of SuperAging — is that the topic appears to be hot and heavy in the world of financial planning. This is exactly what we noted, in our book, was beginning to happen. We can only welcome more of this kind of discussion.
The article makes a few other important points that we intend to explore more fully”
- The role of continuing advances in medicine
- The role of demographics. This second topis particularly important: wealthier people, as the article points out, have higher life expectancies. This places a premium on effective financial planning (and, possibly, the need and desirability of continuing to work). The article notes: “People with even modest levels of financial assets appear to live significantly longer than the national average.”
This is clearly a topic that will get a lot more attention here!