2/11/2014 4:00 PM ET|
Why women should plan to live to 100
We are living longer, much longer -- and the statistics continue to show that women seem destined to outlive men.
Thanks to exercise, organic eating, vitamins, herbal remedies, designer water, less smoking, stress reduction activities, the miracle of red wine, and general all around healthy habits, along with astonishing advances in medical science, baby boomers are the first generation to be confronted with the consequences of extended longevity.
Most boomer women realize their life expectancy will exceed that of their parents' generation, but remarkably few of them have done the kind of retirement planning necessary to address this issue. Studies indicate that less than one-third of women that have reached age 55 have accumulated enough retirement money to match income projections based on their average life expectancy and beyond.
Interesting to me is the fact that the promise of a longer life is even better for those that are coupled. The Society of Actuaries reports that a married couple, age 65 today, has a 48 percent chance that at least one of them will live to be age 90. In addition, longevity statistics tell us that it is usually the women that will outlive their men by at least five to seven years. And if that is not enough, the 2010 U.S. Census shows that out of every 100 people that reach centenarian status, age 100, 80 percent are women.
So, what does all this mean for women in terms of graciously living out this expected and predictable extension of life? You will need to have a retirement income plan that is specifically designed to cover all your requirements.
For many women, the task of examining the way they spend money and actually calculating their current monthly expenditures precisely, not generally, is often met with avoidance. However, the successful execution of this exercise is one of the key factors needed in designing a solid retirement plan that is structured to provide a predictable income flow. This is just one of a few steps that should be addressed before you start on a good plan design that takes into consideration the possibility of extended longevity. The process can often be laced with emotion.
To assist you on this planning journey here are three suggestions that will help you get off to a good start:
1. Be brave
Thinking about not having enough money to take care of your self is scary. Those thoughts can become emotionally paralyzing when you think of yourself as being much older and unable to work, along with the possibility of running out of money. Take a look at your situation and start thinking creatively. Ask yourself, what are my options to make this go right for me and still maintain my lifestyle and privacy?
Maybe an option for you is to simply be aware that you could reduce your lifestyle if need be. Take a look at how you would go about doing just that if you had to. At least confronting that option in advance and accepting that as a possible solution for extending your financial resources can be very empowering. I have a client who has lived in a very large beautiful home that she loves for over 30 years. This home is the center for family gatherings and holiday events. But the home is expensive to maintain and as she moves into a comfortable retirement, she realizes that at some point in the next five years it will be to her advantage to downsize to a smaller home or condominium.
Once she was able to get through the emotional aspects of confronting this possibility, she began to think in terms of something new to look forward to. Being proactive on the idea of making a change made all the difference. It strengthened her feelings of being in control to know she was creating this idea as an option. She discreetly started to look for other housing options just for fun and she became excited about the possible change, down the road, and the extra money she would have to spend on other things, once she was without the expense of the big house.
2. Don't wait
The clock is ticking. The years are passing. Procrastination isn't an option.
The process of preparing the information you will need to plan for your plan, then thinking it through to the decision-making phase takes time. You may need to restructure your investment portfolio — that also takes time and careful consideration. Start your planning process now. If you know how much cash flow your current lifestyle is requiring each month, you will be able to calculate an annual retirement income. You may find that you have been living beyond your means, even if just a little, no harm done.
If this is so, you can make the necessary adjustments to what you are spending and how you are spending your money with a solid purpose in mind. That purpose being the goal of taking good care of yourself for an unknown period of time. Get started now. It won't be easier or better or more comfortable for you to wait to begin your planning process.
3. Be realistic
If you have little to no experience in general investing or the nuances of retirement planning, and if you don't know how to plan for sufficient income that will inevitably be needed to last you for 20 to 40 years, you might consider getting a little help.
Here is what you are up against: Not knowing how much money will be necessary for you to maintain your lifestyle for a prolonged period of time, combine that with living in an inflation prone economy, and then add to that dramatically fluctuating markets. So, if you feel that you have a lack of understanding of financial/investment/retirement planning and a lack of awareness of the resources that may be available to help you meet your goals, then you may want to abolish the do-it-yourself approach.
The statistics are staggering: Less than 74 percent of all women over the age of 50 have an adviser to help walk them through this process. Start looking for someone to work with now. Interview endlessly until you find the person who has both the credentials and personality you are comfortable with to help you on your journey.
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Living to a great age is a very mixed blessing. My grandmothers lived to be 95 and 96. They outlived their siblings, all their friends, and many of their doctors. They were both reasonably healthy and alert until the days they passed. I think they both could have lived to 110 except the boredom finally killed them. Getting around independently becomes harder if not impossible. Eyesight and hearing diminish and the body becomes frail. Safety becomes a constant issue. And that is all true regardless of how much you exercise and take care of yourself. You get to watch yourself become irrelevant. The younger members of your family, children and grandchildren, they have their own lives. Yes, they love you, but they don't have time to fill all the hours of your day. My one grandmother actually used to wonder out loud why she was still here. She felt useless and bored and could not understand the point of her continued existence. I have no particular axe to grind about the article itself--just making an observation.
"Yes, I am 100, my hobbies are sitting and waiting till the next doctors visit"!
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