Can You Make a Financial Plan That Gets You Past 100?

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From vaccines to seatbelts to defibrillators in restaurants, humans are constantly finding new ways to stave off death. And the result is that lifespans are getting longer, with more Americans hitting triple digits than ever before. According to a report from the Centers for Disease Control, the number of Americans to hit 100 rose 43 percent from 2000 to 2014.

But the potential for a long life also means considering a big question when putting together a financial plan: What sort of resources are you going to need if you’re among those people to experience this sort of longevity?

What kind of retirement plan can get you to age 100—and beyond?

Plan on Working Longer…

Let’s say you start working at 25, stop at 65, and live ‘til 95. That’s 40 years in the workforce and 30 in retirement. Do the math, says Walter Updegrave who blogs at RealDealRetirement.com: It works out to 1.3 years working to support a year of retirement. “People today are going to have a really hard time pulling that off,” he says. “They’re going to have a hard time supporting themselves for twenty years.” 

But he acknowledges continuing to work isn’t as easy as just saying you want to continue to work. “Today, 48% of people retire earlier than they expected to,” he says, and not always by choice. Maintaining an income stream is going to require a different way of thinking about work, perhaps cycling in and out of the workforce, carving out a part-time arrangement or consulting agreement with a former employer, or hanging out a shingle of your own.

 In other words, it’s going to take forethought and planning. “Living to 100,” Updegrave says bluntly, “is not a big bonus of extra free time.”

…And More Purposefully

But that doesn’t mean it has to be a slog. Tim Maurer, author of “Simple Money: A No-Nonsense Guide To Personal Finance,” notes that when given a choice between saving more aggressively to afford a long retirement or working longer he’s a fan of the latter—as long as you are working at something you love.

“This is what younger generations are already expecting,” he says. “[In my work] I see individuals who are more keenly interested in finding work that they enjoy and could do indefinitely.” That’s healthy, not just from a financial perspective, but from a medical one. “It appears we are not wired for endless retirement. We are wired to be do-ers,” Maurer says. “Medical professionals say that’s better, in terms of warding off dementia and Alzheimer’s and [other physical ailments].”

Dive Into Your Benefits Headfirst

While we’re on the subject of work, it’s also important to consider how much–and how quickly–the working world is morphing around us. “The idea of working at one company or industry and staying there a long time–that’s pretty much over,” says Updegrave. “People are going to have not just more jobs, but also different types of jobs and employer relationships.” When you’re working for a traditional employer (particularly a large one) chances are you’ll have a 401(k) or other work-based retirement plan, perhaps with an employer match. When you’re an independent contractor, the onus is on your to open a retirement account–perhaps a SEP IRA–and fund it on a regular basis. And as you cycle in and out of different work scenarios, it’s up to you to keep tabs on whether you’re saving enough, whether your assets (in all your plans combined) are appropriately allocated, and how you’re progressing toward your goals.

If this isn’t something that you feel comfortable doing yourself, a yearly fiscal physical with a financial advisor can help.

Save as Much as You Can, When You Can

By now, you’re likely very familiar with the advice to save 15 percent of your income, every year, to fund your retirement needs. That amount can include matching dollars. But what happens you have an unexpected medical bill, or both your kids get into their very expensive dream colleges? “Life is not linear,” Maurer says. “I recommend saving as much as you can when you can, particularly in your younger years, when saving is easier.” In those years, when you’re less likely to be shelling out big child-care expenses, he advocates stretching to save 20 percent. “It actually becomes possible when they partner up. A double income / no kids household—that’s a time when I recommend ramping up the savings,” he says.

You can pull back the savings rate when you’ve got kids around sucking up your hard-earned dollars, but be sure you jack it back up once the nest is empty.

Invest in Your Health

According to the Fidelity Investments’ 2017 Retiree Health Care Cost Estimate, a 65-year-old couple should plan on spending $275,000 in unreimbursed healthcare over their lifetimes—a figure that doesn’t include long-term care and nursing home costs (more on those in a moment). That’s a 6 percent jump from the 2016 number, and is largely attributable to higher Medicare premiums, copays, deductibles, and prescription drug costs.

That’s a big reason why Erin McInrue Savage, vice president of research at AgeWave, says investing in your health is one of the pillars of a retirement plan that’s built to go the distance. One way to do that is by making a regular contribution to a Health Savings Account (HSA) if you’re eligible for one.

Another is to ensure you stay healthy. As The Cleveland Clinic’s Dr. Michael Roizen and I document in our book “AgeProof: Living Longer Without Running Out Of Money Or Breaking A Hip,” there are four things you can do that reduce the occurrence of chronic disease by 75 percent:

  1. Avoid toxins (particularly cigarette smoke)
  2. Eat healthfully (avoiding simple sugars and syrups, saturated and trans fats and simple carbs)
  3. Get up and move (10,000 steps a day is a good start)
  4. Implement a plan to reduce stress. 

Chronic diseases, for the record, account for 84 percent of healthcare expenditures. That’s a lot of money to be able to plow back into your retirement plans.

Hope for the Best, Insure for the Worst

Finally, it helps to be aware of your options for paying for at-home or nursing long-term care should it be come necessary. Traditional long term care insurance is one option, but it’s both pricey and hard to qualify for once you pass your 50s. Two less expensive, newer, options to consider: A deferred annuity (also sometimes referred to as longevity insurance) that you purchase in your 50s to 60s, but don’t draw on until your 80s or older. The money has so much time to grow that the benefit can be significant. Or a hybrid life-insurance policy, where the death benefit can be drawn upon to pay for long-term care if you need it. Talk to a life insurance agent about both of these options.

With Ellie Schroeder