Several months ago, in the space of one day, I attended a webinar about longevity by a financial planner, read a research report about “longevity literacy,” and attended a health education class for older adults. At the end of the day, I realized that all three of these events were interrelated.
Below are nine of my key take-aways from information that was provided about living well in later life and not running out of money during your lifetime:
Medical Advances- Many of the leading causes of death today may no longer be as prevalent in another one or two decades due to medical research advances. Older adults will need to plan what to do with 10-20 more potential years of retirement and how to make their money last.
Nursing Home Stats- The average cost of a nursing home is $8,000 per month or about $95,000 per year. Affluent older adults may choose to self-insure for this risk and low-income persons generally apply for Medicaid. People in the middle-income range might consider long-term care insurance, family support, asset liquidation/downsizing, and other planning strategies.
Social Security is Not Enough- A sobering 70% of single (50% of married) retirees get 50% or more of their income from Social Security, which was never designed to be a sole or primary revenue source and is typically inadequate. Average monthly benefit in 2023: $1,827 ($21,924 per year). Regular investing over 3-4 decades of work is essential to close future income gaps.
Save at Work- One of the best places to save for retirement is a workplace plan (e.g., 401(k) and 403(b) plans) because contributions are deducted automatically from workers’ paychecks and employers may match them, in which case, it is smart to save enough to earn the maximum employer match. If you think you can’t afford to save, start small with 1% of pay and scale up.
Solo Agers Need a Plan- Single, childless adults may have a greater opportunity to save money than married couples with children. They will not be incurring the estimated $233,610 cost to raise a child (per child). On the other hand, they may lack a strong social support system and should expect to have to pay more for care-giving services in later life.
Longevity Statistics- Average 60-year old American males live to 82 and average females live to 85. A recent study found that most Americans don’t have a good sense of how long they are likely to live in retirement, which skews perceptions of how much they need to save. Only 37% of the survey respondents knew the correct answer.
Longevity Literacy Research- The same study found that retirees with strong longevity literacy were more likely to plan and save for retirement while still working compared to those with poor longevity knowledge, and they tend to experience better outcomes in retirement.
Wellness Promotion Factors- It is not enough to live a long life. People want to be healthy also. The following actions can help do this: maintain a healthy weight, make healthy food choices, take nutritional supplements (if needed), exercise most days of the week, do not use tobacco products, control alcohol consumption, manage stress, and get regular check-ups.
Multipurpose Exercise- Research indicates that cognitively engaging exercise (e.g., line dancing, where you must learn and memorize the steps) has a stronger effect on brain health than “mindless” exercise (e.g., walking on a treadmill) that does not involve much thinking.
This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.