Why longevity risk is something to think about
By: Josh Koehnen, MsBA, CFP®
I’ll never forget an event I held several years ago when I had speaker Dr. Steve Franklin come give a presentation on his research. The premise of Dr. Franklin’s work was based on the rise in centenarians and how overall, people were living much longer than ever before and how they had such successful and healthy lives. He traveled around the country, interviewing over 500 centenarians and communicating their best advice to the rest of the world. The one thing he heard from most of these centenarians was that people should manage their finances better. “Plan on living to a hundred,” they’d say. Many of the interviewees didn’t plan well, and due to this misstep, they were in some sort of financial distress because their money did not have the same longevity as they did. Franklin began “The Celebrate 100 Project” to gather and disseminate this wisdom so people can watch, listen and learn from them.
There are more centenarians living today than ever before, with most of them being women. The improvements in modern medicine have contributed to the elderly becoming one of the fastest growing segments of the population. Whether their advice for living longer be diet, exercise, a positive attitude or just having good genes, they all were adamant that young people save their money with the expectancy that they would live to be a hundred. The people who are living longer are vastly unprepared for enjoying the additional years of their lives because longevity risk is something that is overlooked. When you live a longer life, expenses such as health care and cost of living can add up to a number much beyond a number ever planned for. Health is wealth, but without wealth, many people will not be able to enjoy their extra years of health.
I’ll leave you with this story that I think about often: When I was a young kid, my grandfather took me to visit his mother, my great-grandmother. She was very old and living in a run-down nursing home. As we walked out of the building, my grandfather looked at me and told me he would never end up in a place like that because he simply would never allow it and wouldn’t live that long anyway. Fast forward quite some time and I was walking my first-born daughter down a very similar hallway to visit her great-grandpa. Sadly, as often happens, no one ever thinks it’s going to happen to them until it does, so plan accordingly. You don’t want to outlive your money and longevity is something you have to think about now.
Investment Advisor Representatives offering advisory services through Premier Wealth Advisors (PWA), a registered investment adviser. Securities and additional advisory services offered through Independent Financial Group, LLC (IFG), a registered broker dealer and a registered investment adviser. Member FINRA/SIPC. PWA and IFG are unaffiliated entities.