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Category: Longevity

How to Live Longer and Better: New Research.

January 20, 2017

Work Longer.

People who retire early tend to die sooner than those who delay retirement, and recent research provides more proof. A 2016 study by Oregon State University seems to confirm those suspicions with some startling numbers. The research, also featured in the Huffington Post, showed that healthy adults who kept working just one year past age 65 reduced their risk of dying from all causes by 11 percent! This included people who considered themselves unhealthy to begin with.

“It may not apply to everybody, but we think work brings people a lot of economic and social benefits that could impact the length of their lives,” said lead author and researcher Chenkai Wu.

Find Your Purpose.

Another way to extend your life is by having a purpose, according to a British study involving 9,000 65-year-olds. Led by Andrew Steptoe, director of the Institute of Epidemiology and Health Care at University College London, the study found that “people with the highest levels of ‘purpose in life’ were 30 percent less likely to die during the study period, living an average of two years longer than those with the lowest levels.”

Another university team in Fairfax, Virginia reviewed the study, and they pointed out that people who actively search for meaning in life may be better at setting goals and making plans—including making preventive health care decisions.

Certainly one can argue that having purpose doesn’t necessarily mean working. Meditating, volunteering or going back to school have been shown to increase people’s sense of purpose. The point seems to be that having “meaning” in your life is a key component to longevity.

Planning for a Longer Life

Have you put a financial plan in place to account for the longer years you may live? With the beginning of a new year, there is no better time to stop worrying about the future and start planning for the retirement you want to live.

Have you heard that saying, “Do something today that your future self will thank you for”? Well, planning is one of those things, and we are just a phone call away.

Call Silverhawk Private Wealth at 480.296.0200.

 

 

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Silverhawk Private Wealth is one of the Valley’s premiere Phoenix Wealth Advisors.

 

“Longevity Risk” in Retirement

July 25, 2016

What exactly is “risk of longevity”? You may have questioned this when visiting with one of our advisors at Silverhawk Private Wealth. Longevity refers to “long life” or “length of life.” Simply put, longevity risk is the risk that you will outlive your wealth.
It’s a fact that people are living longer. Not only has life expectancy increased, but statistics show that one out of every four 65-year-olds living today will live past the age of 90. One out of 10 will live past 95. The number of centenarians—100 or older–increased more than 43% from 2000 to 2014!
From a financial point of view, living a long time can drastically affect many of your retirement costs, impacting and presenting a “risk” to many different items in your budget—right when you will be living on a fixed income. It is our goal at Silverhawk to apply the Tria Formula℠ as one tool to prevent this from happening with our clients.
Let’s examine some of the issues affected by longevity:
1. Health Care

Health care expenses are a large line item in any retirement budget—even with Medicare. A healthy 65-year-old couple can expect to spend approximately $266,589 to cover health care expenses not covered by Medicare Part A during their retirement on Medicare Parts B, D and a supplemental insurance policy (sometimes called Part C, Medigap or Medicare Advantage). This assumes at least one of them worked and paid Medicare taxes and so their Medicare Part A premiums are covered.

And that total doesn’t even include dental, vision, co-pays, deductibles and out-of-pockets. When you add those into the total health care outlay, a couple’s costs rise to $394,954 throughout retirement. Living longer not only increases yearly health care expenditures, but your chance of developing a serious health issue also rises as you get older, increasing your costs incrementally.

2. Incapacitation

Your odds of becoming incapacitated also increase with age, which could lead to the need for nursing care. In fact, statistics indicate 70% of people over 65 end will up needing some form of assistance. The average yearly cost of a private room in a nursing facility is $91,000.

Medicare is designed for an inpatient stay of 90 days or less, after which high daily coinsurance costs kick in. Medicaid requires a spend-down all of assets to poverty level. There are many options to this scenario that you definitely want to consider.

3. Inflation

It’s a given that prices will continue to get higher every year—in fact, inflation is part of the Federal Reserve’s monetary policy. Inflation undermines your purchasing power over time. While it’s true if the Consumer Price Index (CPI) rises in a given year, retirees get a COLA (Cost-of-Living Adjustment) increase on their Social Security benefit checks, for the last few years, there has been no COLA, primarily because of low oil/gasoline prices. It goes without saying that the longer you live, the more you will spend on consumer goods and living expenses.

4. Excess Withdrawal / Inadequate Income

If your portfolio isn’t structured properly to provide enough income for a long life, you may be at risk of running out of money. Unexpected family expenses or needing to withdraw money during a market downturn can affect your nest egg negatively for the long term (kind of like compound interest in reverse). The death of a spouse is also a risk to your income.
The point of this article is not to inspire fear, but to inspire early, realistic retirement planning to help mitigate your risks.

Please contact your Private Wealth Advisor at Silverhawk, or me, at any time.

Kindest Regards,
Paul J. Mershon,
CFP®, CLU, ChFC, RHU
President, Silverhawk Private Wealth