If you want a Successful Financial Plan for Retirement, you need a Longevity Plan Too
As we build out our “successful second half” capabilities, I keep returning to the notion that we have such a long runway from our 50s to the end of life (like, another 50!) that saying we are planning for retirement feels wrong. Rather, I think we should replace the “R-word” with the term “post-work” because none of us is going to be in the state of retirement for 30 or 40 years. Instead, we’re going to be doing and being many different things during that time, all kinds of “non-retirement” things. As a result, much of the financial conversation stops being about investment portfolios and insurance and more about:
· Health and healthspan
· Caregiving and family obligations
· Geography and community
· Philanthropy and legacy
· Consulting, volunteering and encore entrepreneurship
· AND … optimized distribution and retirement income from portfolios and insurance
For most of us, the journey beginning at age 50 is what I call a “glidepath.” For some, that glidepath is smooth and slow, like a seaplane setting down softly on waveless, still waters. For others, the glidepath is a continuum, like the efficient movement of a condor, picking up momentum for a time, then resting as it soars in the clouds, repeating the cycle as it travels to its destination.
Whatever your glidepath, I hope it’s poetic and full of possibilities. To that end, gliding the investment portfolio part of retirement planning takes thought and effort. Yes, it is influenced by and influences almost everything else you choose in your next 50 years. But there’s a LOT more to understand than just investment holdings. If all we concentrate on is the right income portfolio or the most tax-efficient way to “de-cumulate” a portfolio, we might be doing some optimizing financially, but we’re missing the boat on setting expectations for a brilliant second half. And that’s one of the big reasons you want to work with a CFP® Professional and not someone who is only an “investment advisor.”
But there’s more. In a TIAA survey, clients who had longevity literacy had superior confidence in their financial retirement planning and were more inclined to take the necessary steps to ensure the success of their plans.
So, what exactly is longevity literacy? According to the World Economic Forum, it’s a framework that enables us to build resilience to address the challenges of aging, focusing on three core principles:
· Quality of life
· Financial resilience
· Purpose
Madrina Molly’s content strategy addresses all three of these principles, not just the financial component. Daily, I gain more conviction around the need for financial and longevity planning as we approach and strategize the second halves of our lives.
And the amount of “later life” in our second halves keeps growing. Therefore, we must resist describing our aging population as a problem; some “silver tsunami” that will overwhelm us. Instead, we need to help people navigate their increased lifespans to maximize their healthspans.
And we all need to reframe the conversation around aging and work hard to eliminate ageism.
Young people, that means you; because if you don’t want to suffer from ageism when you’re older, you need to get rid of your ageist preconceptions now.
How do we do that? By realizing we’ve been asking the wrong questions.
I can’t just ask clients if they have considered a long-term care scenario. I have to ask them if they’re ready to address a decade or more of accommodations to address mild frailty as they age.
I can’t just ask them if they’re prepared to apply for Medicare. Rather, we must discuss how they are going to improve their metabolic and periodontal health over the next 30+ years to ward off disease and dementia.
I can’t just ask them what their housing costs will be. We need to discuss where they will live as they age, in relation to family, community, and with regard to safety.
It’s bad enough that only 16% of women of a certain age(ncy) say they’ve received any financial education. Not a lot. Not some. Any. Based on answers to key questions, the TIAA Institute estimates that only 12% of Americans have strong longevity literacy, and up to 53% of U.S. adults have inaccurate information about life expectancy.
Finally, a major insurer said 98% of respondents to their online Social Security survey did not know their Full Retirement Age (FRA) for claiming benefits. Yikes! (Hint: If you were born in 1960 or beyond, it’s 67.)
For the record, today, a 65-year-old man has an average life expectancy 85, up from 81 just a few years ago. And a 65-year-old woman has an average life expectancy of 87 (up from 83). That means that half of you will live longer than that.
What can you do? Experts say it’s time to rethink our 20th Century approach to caregiving, single family housing, retirement preparedness, and ending paid work. And we need to ensure that our children begin to start considering and discussing aging a lot earlier in life than they do today. I’m certain I’ll be spending a lot of time on creative solutions for our cohort in the future.
But immediately, the most important thing we can all do is demand the attention of our policy makers to consider that we are not going anywhere. We vote, and we will need support and infrastructure. This is not a tomorrow problem. We have achieved Peak 65! #WeRescueOurselves #NotYoungNotDone
Copyright © Madrina Molly, LLC 2024. All rights reserved.
The information contained herein and shared by Madrina Molly™ constitutes financial education and not investment or financial advice
Sherry Finkel Murphy, CFP®, RICP®, ChFC®, is the Founder and CEO of Madrina Molly, LLC.
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I started writing a serious post, but it just wasn’t happening. I took a break to find something amusing on TV and settled on Zombie House Flippers. I have thoughts.
For starters, their math doesn’t “math” for me, and I’ll explain that in a minute. But it made me think about how our DIY economy has grown beyond all measure, courtesy of these types of programs, customer workshops at Home Depot/Lowe’s, and social media. I applaud the industriousness, talent, and personal ambition of these creators.
But ….