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Who Wants To Live Forever?

April 25, 2024
Personal Finance
Navigating the Financial Path to a Century of Life

The iconic Queen song from the Highlander soundtrack, with its haunting melody and lyrics, brings up the theme of eternal life. In our modern era, where scientific advancements and healthcare improvements are continually pushing the boundaries of human longevity, the once-distant dream of living to the age of 100 and beyond is becoming a tangible reality for a growing number of people. This shift toward greater lifespans is not only a testament to human ingenuity but also poses new questions about the quality of life, retirement implications, and the ethical considerations of living significantly longer lives.

Americans are experiencing longer lifespans than ever before, marking a significant shift in demographics. This increase in longevity is undoubtedly positive news, heralding a new era of extended life experiences and opportunities. However, it also brings to light the necessity for enhanced education on issues related to living longer, meticulous planning, and proactive actions to ensure individuals are well-prepared for potentially very lengthy lives.

For couples where at least one partner is 65 years old today, the statistics are quite revealing. There exists an 89 percent likelihood that one of the partners will live to see their 85th birthday, a 73 percent chance of one reaching the age of 90, and, remarkably, in 45 percent of these couples, one partner will celebrate at least their 95th birthday. These figures underscore the importance of preparing for a future that could extend well beyond previous expectations.

Moreover, despite a brief downturn in life expectancy attributed to the recent global pandemic, the overall trend towards increased longevity is anticipated to continue across successive generations. The Stanford Center on Longevity provides an even more striking projection: up to half of the children who are five years old today might reach the milestone age of 100. This projection not only highlights the advancements in healthcare and living conditions that have contributed to increased life spans but also emphasizes the need for current and future generations to adopt a comprehensive and forward-thinking approach to aging. 

In light of these trends, it becomes imperative for individuals, families, and communities to engage in discussions around longevity, focusing on the physical, financial, and emotional preparations necessary for a fulfilling life that could span a century. From adopting healthier lifestyles and securing financial stability to fostering strong social connections that support mental health, the journey towards successfully navigating a longer life requires concerted effort and planning at every stage.

As Americans navigate the prospects of living longer lives, the emphasis must shift toward a holistic approach to longevity. This encompasses not just living longer but living well, with a focus on quality of life, health, and happiness throughout the extended years.

The significant increase in life expectancy witnessed in recent years has introduced a multifaceted matrix of both challenges and opportunities, especially when it comes to preparing financially for retirement. This era of longer lifespans demands a reevaluation of conventional retirement planning strategies. A detailed analysis provided by Corebridge Financial reveals a fascinating insight: an astonishing 54% of Americans nurture the dream of living to see their hundredth birthday.

This longing for longevity, while inspiring, also unveils a labyrinth of financial uncertainties that need to be navigated with caution. The journey toward achieving this remarkable centenarian milestone, therefore, is not just a testament to human resilience and medical advancements but also a clarion call for a more proactive and strategic approach to retirement planning, highlighting the necessity for individuals to plan meticulously and act decisively in securing their financial futures.

A Shift to Personal Responsibility

People often ask me to pinpoint the single biggest change I've witnessed since I started in this business over four decades ago. The answer is quite simple yet profound: it's the aspect of longevity. Back in the day, the norm was to retire at the age of 60-65, and, unfortunately, many people would pass away within the decade, around 70-75 years old.

This meant that individuals only needed to plan for about a decade of retirement income. The financial landscape was quite different then. Most people could count on a pension from their workplace, social security benefits, and whatever personal savings they had managed to accumulate over the years. The need for additional savings wasn't as critical because the expectancy of living beyond that timeframe was relatively low.

Fast forward to today, and the scenario has dramatically changed. The retirement age has slightly shifted, with most people retiring between age 65-70 years. However, the striking difference lies in the duration of retirement. People now need to plan for retirement income that could span 25, 35 or even 40 years due to increased life expectancies. This extended period has introduced a new set of financial challenges.

Moreover, the safety net that once existed through workplace pensions has largely disappeared. The reality is that most people today do not have access to a pension plan through their employer, which puts additional pressure on personal savings and investment strategies. Furthermore, the future of social security remains a topic of much debate and uncertainty, adding another layer of complexity to retirement planning.

As a result, the importance of personal savings has never been more critical. People must now take a more active role in their financial planning, considering various investment vehicles and savings plans that can offer both growth and stability for their retirement years. Understanding the nuances of retirement planning, including tax implications and withdrawal strategies, has become essential for ensuring a comfortable and secure retirement.

The landscape of retirement planning has undergone a significant transformation over the past several decades. With increased life expectancy, the disappearance of traditional pension plans, and uncertainty surrounding social security, individuals must be more diligent and proactive in their financial efforts to ensure they can enjoy a fulfilling and financially secure retirement.

The Financial Implications of Longer Lives

The prospect of living longer lives is a testament to the monumental strides we've made in medical science. However, this achievement comes with a significant implication: the urgent need for thorough and forward-thinking financial planning. Recent studies conducted by Corebridge Financial shed light on this unavoidable truth. As healthcare innovations continue to push the boundaries of human longevity, the span of retirement extends in tandem. 

For the average American, who retires at around the age of 62, this presents a new set of challenges. With the median household income recorded at $74,580, people must now prepare for a retirement phase that could potentially span over 38 years. This is a considerable shift from previous generations, where the retirement period was significantly shorter. 

Given these dynamics, maintaining your standard of living during retirement becomes a complex equation. To keep approximately 80% of your pre-retirement income annually over such a prolonged period, you would need to amass a retirement fund of around $2.3 million. This figure is daunting but necessary when considering the cost of healthcare, inflation, and the unforeseeable economic landscape of the future.

Therefore, it's clear that achieving a secure retirement in this new age requires not only diligent saving but also strategic investment and meticulous long-term planning. It underscores the importance of starting retirement planning early, exploring various savings avenues, and possibly consulting financial advisors to navigate this intricate journey. The goal is not just to live longer but to live well, with financial stability that lasts through your golden years.

The Path to a Secure Financial Future

Despite this clear need for substantial retirement savings, the level of confidence among Americans regarding their financial readiness for retirement is disturbingly low. Indeed, only about 27% of individuals feel confident that their savings will adequately support them through their retirement years, without the fear of depleting their resources.

Compounding the anxiety many feel about retirement finances is the deeply ingrained fear of outliving one's savings. This fear is so profound that two-thirds of Americans admit it ranks higher on their list of worries than death itself. Such a revelation not only underscores the deep-seated anxiety surrounding financial security in one's golden years but also emphasizes the urgent need for more comprehensive financial planning and education.

The current financial planning landscape clearly indicates that many are ill-prepared for the financial realities of a longer retirement. This situation calls for a concerted effort from financial institutions, government bodies, and individuals to emphasize the importance of early, aggressive, and strategic financial planning. By fostering a broader understanding of investment strategies, savings plans, and retirement products, society can better equip itself to face the financial challenges of living longer, ensuring a retirement period that is not just enduring but also enriching and devoid of financial worry.

Addressing the challenges of funding longer lives necessitates a multifaceted approach, encompassing individual action, employer initiatives, and the guidance of financial professionals. At the individual level, envisioning retirement not just as a distant dream but as a tangible, approaching reality is crucial. This involves not only diligent saving through 401(k)s, IRAs, and other retirement vehicles but also engaging in ongoing discussions with financial professionals to forge a robust retirement income strategy that integrates Social Security, Medicare, and other income sources effectively.

Employers, too, play a pivotal role in facilitating this journey toward financial security. By offering retirement planning resources, tools, and education, employers can empower their workforce to take proactive steps toward securing their financial future. Furthermore, integrating options for guaranteed lifetime income within workplace retirement plans can provide employees with a much-needed safety net, ensuring a steady income stream in retirement.

Financial professionals, on the other hand, are tasked with broadening the scope of retirement planning conversations with their clients. This entails not only addressing immediate financial concerns but also fostering a holistic understanding of retirement that encompasses healthcare, lifestyle aspirations, and potential caregiving responsibilities. By doing so, financial professionals can help clients navigate the complexities of planning for a long, fulfilling retirement.

A Call to Action

As we find ourselves on the brink of a revolutionary era characterized by unprecedented longevity, the urgency to take decisive action cannot be overstated. The path to achieving financial security in retirement, particularly in an age where living to become a centenarian is increasingly plausible, is undoubtedly filled with a multitude of challenges. However, these obstacles are by no means insurmountable. Through a combination of dedicated effort, strategic planning informed by the latest insights, and the unwavering support of trusted advisors, the aspiration of celebrating one's 100th birthday can transform from a mere fantasy into a tangible reality—a reality approached with both confidence and boundless optimism.

For individuals, there is no better time than the present to begin laying the groundwork for a prosperous future. It is essential to paint a vivid picture of what your golden years might look like, to gain a thorough understanding of your current financial situation, and to actively seek out the expertise of financial planning professionals. These steps are critical in navigating the intricate landscape of long-term financial preparation. Likewise, for employers and financial professionals, there exists a profound responsibility to furnish the necessary tools, educational resources, and unwavering support required to empower people to take the reins of their financial destinies confidently.

By joining forces, we can boldly address the economic implications of prolonged lifespans, ensuring that the goal of reaching 100 years of age is not just feasible but also celebrated with the peace of mind that comes from having a solid financial foundation. The actions we commit to today are instrumental in paving the way for a future that is not only brighter but also characterized by the assurance of financial well-being. Let's embrace this challenge with determination, fostering an environment where living to 100 is not only possible but also synonymous with enjoying those years in prosperity. Together, we can turn this vision into reality.

Tom Mathews