Invest Retirement

You’re Going To Live Longer Than You Imagine. Here’s The Best Way To Plan For Your Future

Rebecca Cohen  |  March 3, 2020

New longevity-predicting tools are on the horizon. Take a look at what they may mean for your financial future.

Would you want to know when you’re going to die? Under normal circumstances, probably not. But when it comes to planning for retirement, that actually sounds like useful information (except for the whole “impending doom” thing, of course). If you’re anything like me, you like to plan out every minute of your life based on hard facts, using lists and calendars to hold it all together. The unknown is not our cup of tea, Type-A ladies, and a whole new slough of seemingly unanswerable questions hit me this year as I entered the job market — most of them about retirement. That’s right, I’m ten months out of college and I’m already freaking out about running out of money in my old age. Even if I stow away every penny, amp up the risk in my portfolio, and contribute to multiple accounts, will it be enough? That’s the question I, and countless others, find themselves asking every day. 

So let’s talk longevity, why don’t we ? The human race is living longer than ever before. Life expectancy is now 79 years old  — about 30 years longer than it was at the start of the 20th century, says Laura Carstensen, the director of the Stanford Center on Longevity. The next generation is expected to live well into their 100s. Objectively, this seems great, but consider what happens in old age: medical problems, retirement, and a lot of time. Carstensen explains that our previous “models and assumptions about retirement no longer hold” based on this fact. 

What’s her advice? Work as long as you can, and start saving as early as you can. Staying in a job is especially crucial for those approaching retirement with a smaller savings account. When it comes to saving, time (and compound interest) are on your side. If you start young, you have the chance to let your money make money for you — that is, if you put your money into an IRA or another retirement savings account. High yield savings accounts (which we’ve heard a lot about lately) are great, but they’ll never give you the same rate of return as stocks or bonds, so it’s important to be saving the right way, says Carstensen. 

Of course, she adds, the ability to predict life expectancy on a personalized basis would make planning that much more straightforward, since relying on averages doesn’t work well for everyone. But that doesn’t exist… Or does it?

Enter: New retirement planning tools that can somewhat predict your lifespan. Yes, you read that correctly. As this story in Wall Street Journal notes, a number of online startups are rolling out tools that can help you figure out just how long you might live. Some take a look at your genes and can spit out the probability that you will experience medical issues, like Alzheimer’s, for example, in old age. Others consider your current physical and financial health to predict how well off you’ll be come retirement. Moshe Milevsky, a finance professor at York University, explains to the WSJ that these tools will help people make better-informed financial decisions when it comes to saving for retirement, claiming Social Security, and deciding whether to buy an annuity, budget for long-term care, or invest in a life insurance policy. Still, the tools aren’t perfect. The results offer a “range of outcomes,” so participants need to be open to planning for a variety of options when using this new technology.

While these magical tools are on the horizon, they aren’t here just yet, and no matter how good they get, they’ll never supercede the most tried and true way to prepare for your financial life in retirement, which is to have a savings plan, says Carstensen. If you’re not putting money away, having information on your longevity won’t have an impact on your financial health — unless you put it to work. 

Even so, it’s hard to imagine your life down the line, she says. “We tend not to connect emotionally to this future self; the people we imagine seem like strangers,” Carstensen explains. With the inability to connect to that version of you who you’ll eventually be in retirement, the urgency to plan goes away. But if you’re young today, you can count on “being old for decades,” she says. “This is the person [you’ll] need to consider when making plans so that [your] future [self] will be able to chase [your] dreams and enjoy life in [your] 90s and beyond.” 


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