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Longevity and Retirement Fact vs Fiction

Posted by Cameron Kashani on Wed, 06/05/2019 - 12:53

In this blog I am going to look at longevity and retirement in the hopes that we can prepare you for the changing financial atmosphere. 

 

Couple walking on a city street
 

 

There is a common misconception that we often hear, the idea that we must prepare to be conservative with our finances when it comes time to retire.  In reality, industry thinking is changing, and it is only natural that we update the playbook to acknowledge those changes.  As the life expectancy of the average person continues to increase, the ways we think about retirement must also evolve.  According to Morningstar, at the time of Herbert Hoover’s presidency (1929-1933), the average life expectancy was 58 years for a man, and 61 years for a woman1.  When looking at Vanguard's statistics on life expectancy today we see a very large gap between the life expectancy in the 1920’s and 1930’s and now, and what is more interesting is to see the how having a partner impacts that life expectancy:

 

  • “Male. A 65-year-old man has a 41% chance of living to age 85 and a 20% chance of living to age 90.
  • Female. A 65-year-old woman has a 53% chance of living to age 85 and a 32% chance of living to age 90.
  • Couple. If the man and woman are married, the chance that at least one of them will live to any given age is increased. There's a 72% chance that one of them will live to age 85 and a 45% chance that one will live to age 90. There's even an 18% chance that one of them will live to age 95, as shown below." 2

 

There is no doubt about it, given the improvements of technology and medicine,  we are living longer (especially those of us with a partner), and yes that means we will need our money to last longer now than we did in 1945, but I refuse to believe that this means we live less comfortably.

 

Retirement ought to be looked at as a reward for all of your hard work, something to be enjoyed not stressed over.   This is why we suggest taking a second look at your investments.  You have big dreams for your retirement, we all do!  But is your plan changing with the time? 

 

            -Cameron Kashani, MBA

 

-Morningstar Andex Chart 2017 1

-Vanguard 2 : https://www.vanguard.com/us/insights/retirement/plan-for-a-long-retirement-tool