Planning for Longevity and Vitality

If you’re an avid reader of health and science journalism, you have likely noticed the recent emergence of longevity as a buzzword. This shouldn’t come as a surprise, for most people it’s relatively easy to make a case for a lifestyle that maximizes one’s opportunity to pursue goals, dreams, and adventure with friends and family into their twilight years. Here’s the good news: many of the expert recommendations for longevity are intuitive habits: exercise (both type and frequency), making healthier food choices, fostering meaningful relationships with friends and family, and intellectual engagement are a few core tenets. Throw in some professional expertise from a longevity-focused physician, some discipline and consistency in your daily routine, and you could increase the probability of your own longevity.

However, one important aspect that is frequently absent during discussions about longevity is personal finances. More specifically: If I am going to live a longer, healthier life, what implications does this have for my financial needs? And what, if anything, should I consider adjusting within my current plan?

Fortunately, there are many parallels between how you plan for personal and financial health: combine some intuition: like saving and investing, seek additional expertise from a financial planner, apply some discipline and consistency and you’ll be more likely to optimize your chances of continuing your financial freedom well into your twilight years.

For the non-intuitive decisions within your plan, expert support can make all the difference. There are a lot of questions that need to be addressed for successful long-term financial planning. A good expert can provide a thoughtful framework to help ensure you are thinking through all the relevant questions when it comes to retirement and legacy decision making. A shortlist of questions to consider when devising a successful financial plan for longevity follows:

When Should I Think About Retiring?

If you’re in good health today, delaying your retirement – even via part time work – can provide significant advantages. When FDR signed the Social Security Act in 1935, ultimately setting 65 as the age that retirement benefits could be received, the average life span was 58 for men and 62 for women. Even without a focus on longevity, the average age for men (74.5) and women (80.5) is now far longer. A moderate delay in your retirement date can reduce the need to draw down on savings, providing a few more years to layer some compounding growth within your nest egg. Closely related to this, you’ll also need to think about when to claim social security benefits. For example, if you’re expecting to live beyond 81 years, there are advantages to delaying social security payments until 70, pending consideration of how heavily you’re drawing down on your savings and investments.

Where an expert can help: A cash flow analysis can help determine what different financial scenarios could look like if you file for your social security benefits at age 62, 67, or 70, including a consideration of tax implications and how this impacts your overall portfolio over time.

How Should I Think About Healthcare Expenses for Retirement?

Given the rising trajectory of healthcare costs in America, it’s easy to see the role good health can play in longevity and financial well-being. Health insurance choices for retirement are not always straightforward, and there are many factors that can affect your decision between traditional Medicare, or one of the commercially insurance-backed Medicare “Advantage” plans. Separately, don’t forget to consider long-term care insurance (LTC). You’ll need to weigh the likelihood of your need for such coverage alongside the costs and assess the various insurance products that can provide adequate coverage. Finally, if your employer offers a Health Spending Account (HSA), you may wish to consider using this as a vehicle to provide future health care expenses. Maximum contributions (individual $3650 and family $7300) per year can compound quickly over time and may be a solution for some.

Where an expert can help: While it’s beyond the scope of this article to tell you which health insurance plan(s) is right for you, if you are unable to confidently answer at least the following questions, then you should consider speaking with an independent expert for a more holistic discussion:

• Do I really understand the difference between traditional Medicare and Medicare “Advantage”?
• What are the financial implications of enrolling in traditional Medicare vs Medicare Advantage?
• How might my annual income impact my Medicare expenses within IRMAA limits?

How Can I Maximize My Existing Savings to Support My Longevity?

In an ideal scenario, retirement should be a time to focus on enjoying the fruits of your years of labor: rewarding the healthy and responsible lifestyle choices that put you in the position to be active longer. As a result, making your savings last longer becomes a critical priority. Three recommendations to consider:

• Continue to invest in equities, it’s one of the best ways to combat inflation and provide growth;
• Prioritize income producing assets, such as dividend paying stocks, individual bonds, and bond ETFs;
• Aim for a combination of risk assets and fixed income that match your comfort level of volatility and review them annually as your life changes.

On the cost side of the ledger, don’t discount common scenarios such as the desire to relocate to a different state. These choices can have major financial implications, driven by factors such as: cost of living adjustments, real estate costs, state and local taxes differentials, access to (and resulting cost of) medical care, and access (or lack thereof) to a robust support network.

Where an expert can help: A good financial planner can help not only with asset allocation, but also thinking through the implications of any major lifestyle changes, including how to strategically mitigate anticipated, and potentially unanticipated costs to help make your money last.

It’s a privilege to live healthfully into your golden years. Like anything in life, good things don’t happen overnight. It takes consistency, discipline, sacrifice and planning to achieve your dreams and goals. Like elite athletes or high performers, when navigating a roadmap of preparation, it helps to have a great coach who will help you navigate the changing landscape and assist you in making the most informed decisions along your way to success.

About the Author: Jackie Fontana, CFP® Over the past 15 years, Jackie has enjoyed a diverse global career in financial services and business development. Jackie’s primary focus is helping her clients grow their assets so they can live their best lives while they plan to achieve crucial life goals, such as education and retirement funding, or planning life’s adventures. Jackie began her career in private wealth management, serving with Sanford Bernstein and Deutsche Bank in the Los Angeles area. This was followed by a successful stint in Melbourne, Australia working in executive recruitment for Robert Half International. Most recently, Jackie served with the Institute of International Finance, managing key relationships with prominent senior banking executives across Europe and Asia. Jackie is a Certified Financial Planner™ practitioner and holds a Bachelor of Arts Degree from the University of California Davis, and a Master’s of Arts in International Affairs from American University. Jackie and her husband Eric have three boys and reside in Darnestown, Maryland. Outside of work, Jackie is an outdoor enthusiast who is passionate about travel and cheering for her boys at swim meets.