What Do Longer Lifespans Mean For Your IRA?
Why a 65-Year-Old With a 95-Year Life Expectancy Needs to Start Planning
Like a 45-Year-Old With a 75-Year Life Expectancy
- Save 10% of your income.
- Plan to rely on 4% of your investments each year after you retire.
- The proportion of your savings invested in bonds should approximate your age.
Yet, these financial planning assumptions can be woefully inadequate in helping people think about what a 90- or 95-year lifespan means for their retirement.
“People currently in their 60s or 70s have a good chance of living in their 90s. In half of all marriages where one person is over 65, at least one person is likely to live beyond their 90th birthday”
Medicine Has Come A Long Way Since The 1970s
Over the last generation, the growing population of the “oldest old” has been primarily attributable to improvements in lifestyle habits and advances in medical technology and treatment practices. Folks born in the year of the first kidney transplant (1954) are only reaching retirement age in 2019. Now, that procedure is performed more than 20,000 times every year globally, growing on average by 16% over the last 65 years. The MMR vaccine is even more recent, only coming into widespread usage in the 1970s: Measles, Mumps, and Rubella killed over half a million people in 1900 and by 1999 had been virtually eradicated.
Many of these advancements have substantially decreased the death rate for diseases affecting older people. According to data from the CDC, the national death rate from cardiovascular diseases – by far the most common killer in the United States — was cut in half from 507.4 per 100,000 people to just 252 between 1980 and 2014. As a result, people who live until they are 65 or even 70 are increasingly likely to live into their 90s. One-third of all women and one-fifth of all men alive today at 65 are expected to live past their 90th birthday.
Financial Plans Have Not Kept Pace
The average income – from social security, pensions, and investment accounts – of the “oldest old” was just $14,760 in 2011; which in most areas of the United States is not enough to cover basic living expenses. As a result, the poverty rate for seniors over 90 is 50% higher than the poverty rate of people aged 65 – 89%.
95-year life spans are not as uncommon as they once were, and extrapolating from past changes in life expectancy might under-state the odds of someone living this long.
The impact on longevity of innovations like 3-D printed prosthetic organs, the gene-editing technology CRISPR, and immunotherapy are only now becoming understood. Some believe that people alive today could live until 150. Nobody really knows what their effects on longevity might be, but it’s not unreasonable to expect that these technologies have the potential to revolutionize longevity.