Longevity Isn’t Just at the End

by Andrew Sivertsen, CFP®

For many of us, the topic of longevity isn’t something about which we spend a lot of time thinking. We all hope to live a long and full life, but are usually too busy living life to think about it.

It is not until many of us turn 65, go on Medicare, retire, and start seeing an uptick in friends and family members passing away that we begin to ponder just how many years we will get. For a growing percentage of us, we will have to be prepared mentally and financially to live well into our ‘80s and ‘90s. What exactly does that mean and look like for those who’ve yet to reach their ‘80s and ‘90s?

Education & Early Career

The world is telling young people that they will live and work for a very long time. This is not exactly a message that inspires them to rush their assimilation into society via an education, career, and family.  Maybe it’s time we change the message and meaning of work.

Rather than ask our children what they want to be when they grow up, my wife Amy and I ask our children about what they want to do or accomplish first after graduating from school. More and more students are considering taking a “gap year” (a hiatus, of sorts) after high school and college to work and travel to other parts of the world. This could be a good thing, as the changing economic landscape of baby boomers staying in the workforce longer creates a trickle-down that limits jobs for graduates. In addition, the demand for advanced degrees can push the completion of a student’s education further into his or her ‘20s.

The rising cost of education has put greater pressure on parents and students to pay more for college, which competes directly with saving for retirement. Following a measured financial plan for college can help ensure that students don’t enter the work force saddled with excessive amounts of debt. Rather than focusing on putting education first and career second, we instead may have to think about education as a lifelong pursuit. This would allow us to spread out paying the bill for an education, and shift from having the traditional lifetime career to pursuing multiple careers throughout our lives.

Mid-Career

People are already waiting until later in life to marry, and many are not marrying at all. The National Center for Health Statistics has marked the general fertility rate for women at its lowest point ever. More women are forgoing having children all together with one notable exception—an uptick in first-time births for women over 35.

With the lengthening of working careers, most people are seeking ways to create more work-life balance. Employees are not only pushing for better life balance and opportunities to work from home, but also to lengthen maternity leave and add options for paternity leave. A growing number of workers are ditching traditional employment for the flexibility of contract work and entrepreneurship. Still others are finding ways to take sabbaticals and extended retreats to break up their working careers.

A big financial dilemma for this group is how to find the right balance between saving for tomorrow’s retirement and building memories from today’s experiences. Working with your Planning Center advisor to define your values and goals will help answer that question. He or she can also help you find the equilibrium between your retirement plan and your current cash flow plan.

Late Career

Saving for retirement continues to get squeezed during peak earning years as lots of us are helping to care for parents and even grandparents. All of this is happening while many financially strapped children remain in their family home through much of their ‘20s. As technology continues to change the job landscape, even the most capable and loyal workers may find themselves forced out of their high-paying jobs and into lower-paying work or early retirement.

With pensions all but gone and the future of Social security still in question, millions of people will realize the need to work well into their ‘60s or ‘70s. Even those who are prepared financially may prefer to work to fulfill their purpose in life, especially since children are waiting longer to give their parents grandchildren. Among other financial planning options to consider are:

  • A bliss year—where you retire from a high-paying job and take a year off to refresh before going back to contract work
  • Part-time work
  • Non-profit work—typically such work is lower paying, and slower paced but may prove more fulfilling.

For those of you who plan to retire, it is important to have two plans in place. The first plan should involve deciding what you will be retiring to, and figuring out how you will be fulfilling your purpose day-in and day-out without work. The second plan is to understand your financial resources and know how to devise a distribution strategy that can smooth out the go-go years of early retirement. The goal is to amass enough resources to deal with the reality that many of us will be healthy and active into our ‘80s and ‘90s.

For all of us, life is filled with ups and downs. Taking a little time each day to reflect on our good fortune and finding a means of expressing gratitude goes a long way toward improving our lives and longevity.  Understanding how life shifts as we live longer and longer is important to appreciating each other and living well together in this expanding inter-generational world. Ultimately, longevity isn’t just at the end of our lives. It affects us all no matter what our ages.


 

Andrew Sivertsen, CFP®, is a Sr. Financial Planner in the Quad Cities office of The Planning Center, a fee-only financial planning and wealth management firm. Email him at: andrew@theplanningcenter.com.

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