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Long Odds

Jonathan Clements

SUPPOSE YOU KNEW you’d live until at least age 90. How would that change your thinking about retirement?

It seems most of us focus less on the possibility of a long life and more on the risk of an early death. This grim view is buttressed by endless anecdotal evidence—celebrities who pass away in their 40s and 50s, terrible accidents that take multiple lives, old classmates and colleagues who die at tragically young ages. Still, I’m starting to think that this focus on an early demise is not only a gloomy distraction from life’s daily joys, but also it leads us to make less-than-ideal retirement decisions.

Indeed, as I squint into the future from the not-so-grand age of 61, it occurs to me that there’s a chance I have three decades or more ahead of me, and it would be a shame to spend all that time focusing solely on fun and on short-term investment results. If I do that, I fear there’s a risk I’ll look back and rue the wasted time.

So, humor me, and join me in a thought experiment: If you knew the grim reaper wouldn’t turn up until your 90s, how would that alter your retirement plans? Here are four changes you might make:

  • Work longer or work part-time. By age 60, many folks are heartily sick of the work world and anxious to call it quits. But let’s face it: If you retire then and live another three-plus decades, you’re looking at an awful lot of years of traveling, volunteering and relaxing—far, far more than earlier generations enjoyed. Would this be a good way to use the final third of your life and more than 40% of your adult years? Perhaps part-time work, or some other activity that gives your days both structure and purpose, wouldn’t be a bad idea.
  • Delay Social Security and buy immediate annuities. Folks shy away from purchasing income annuities and postponing Social Security because they fear they won’t live long enough for these financial bets to pay off. But if you knew you’d live to your 90s, they become much more compelling.
  • Invest more in stocks, while also worrying more about inflation. Faced with the prospect of a long life, inflation looms as a much larger threat—3% annual inflation turns a dollar’s purchasing power into 41 cents after 30 years—but there’s an offsetting advantage: You have the time to hang tough through bear markets and potentially earn healthy long-run returns with stocks.
  • Spend more cautiously in your 60s. I’ve been surprised by how many folks say they’re happy to spend freely in their 60s because they figure they won’t get much joy from spending in their 80s and, in any case, they figure they won’t need as much money. I fear these folks’ future selves might strenuously disagree, especially if they’re hit with long-term-care costs.

Still, on this last one, I think it’s important to strike the right balance. Even if folks knew they’d live to their 90s and hence they might want to spend a tad more cautiously in their 60s, I wouldn’t want to discourage them from ticking off bucket-list items in their 60s and early 70s. While we might live until our 90s, our desire to spend time in the wider world—whether it’s traveling, hiking, attending concerts, visiting friends—might wane in our late 70s or early 80s.

All this raises an obvious question: What are the chances that a 65-year-old will live to his or her 90s? Among the general population, the odds aren’t great: 20% of 65-year-old men and 31% of 65-year-old women will live to age 90. What if you’re married? The chance that one of you will live to 90 rises to 45%.

But what if you’re a 65-year-old who is in good current health, has lived a healthy lifestyle and didn’t have a job that was physically demanding? The odds of making it to 90 rise to 30% for men and 42% for women, with the chances that one member of a couple lives that long at 60%. Suddenly, living to 90 looks like a distinct possibility.

Still, such odds may not be enough to persuade folks to change their behavior. But I’d encourage readers to ponder one more notion: As you plan your retirement, what’s the bigger financial risk, dying early or living to a ripe old age?

Let’s be honest: If you keeled over at 68, it would be a family tragedy—but it wouldn’t be a financial one. At that juncture, all your financial problems would be over, and your family would likely be better off financially because they’d inherit your retirement nest egg, which would probably still be largely intact.

Instead, the real financial risk is living to a ripe old age. That raises the question: As you make your retirement plans, shouldn’t you care more about the live version of your future self, rather than the dead one?

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney, on Facebook and on Threads, and check out his earlier articles.

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