Thoughts on Longevity
Have you ever wondered how long you’ll live? It’s not the typical topic of conversation at parties or family gatherings, but for financial advisors, it’s a daily question. Planning for life expectancy is a crucial part of the financial process, and the answer varies for everyone.
Some people may hesitate to answer, fearing they’ll jinx themselves if they talk about it or admit their concerns about dying. Others might go with their parents’ age or whatever their advisor suggests without giving it much thought. But this decision can significantly impact your financial plan. Plan to die at an early age, and you might end up outliving your assets. Plan to die at an old age and you could inadvertently limit your lifestyle.
What can you do?
Start seriously considering your longevity. Of course, no one knows exactly how long they will live, but setting a life expectancy goal can help guide your choices and lifestyle today.
For example, if you really do feel you might die young, you can start checking things off your bucket list sooner rather than later. You can also put together a backup plan in case you live longer than expected. This plan should include choosing a beneficiary to receive any remaining assets after your death. Who would you want to receive these assets? Whose life would you want to change with these funds?
Let’s say you plan to live to 100. You need to make sure you save enough today to mitigate the risk of outliving your assets. Make sure you have a solid plan in place to cover any fixed assets for that period of time, and make sure your investments and risk align with this timeframe. However, you should also consider building a “fun” bucket into your plan. Since you don’t know when you are going to die, have funds available today for adventures and to follow your passions, instead of waiting until you are in your 90s.
There are calculators available online to help you determine what your life expectancy could be. These calculators can provide a reasonable estimate of your expected lifespan if you can answer a few short questions. You can also learn which factors impact this estimate the most so you can start proactively making changes to live the life you desire.
No one likes to think about their own death, but by taking a moment to set a life expectancy goal, you can help set yourself on a path to living your ideal life.
Anne M. Mank
Director of Financial Planning