The longevity risk. Life is one long journey, not two

One of my relatives lived on a pension of $23 a month. Of course that was his military pension in 1866. That’s $491 in 2024 –  poverty level for sure. 

In retirement I do a great deal of reading, listening to and viewing opinions and strategies about others planning to retire. Having managed pension and 401k plans for decades, I can’t let go. 

One thing I know for sure, views about retirement are as diverse as each individual. There is no standard, no right way.  The only constant seems to the having sufficient income, but that too has many definitions. 

Even the money aspect of retirement has nothing close to a standard. It’s accumulated in different ways and certainly used in different ways. How and when to pay taxes adds another dimension. Retiring before age 65, out health insurance on your list of projects. 

Even with all the variables, many experts and hundreds of software tools stand ready to help each of us.  No matter though, the key is in the assumptions- which must be accurate for decades into the future- likely as accurate as projecting the cost of new government legislation over ten years.

Retirement used to be simple. You worked to age 65, hung around a few years and died. Or, you never stopped working. Many retirees lived with multi-generational families, barely half of Americans ever had a pension. 

According to the Social Security Administration the life expectancy at age 65 in 1940 was 12.7. In the same year there were 3.9 million Americans age 65 or older. Today there are nearly 56 million while life expectancy at age 65 has grown to 19.8 years.

Now the golden years require more gold. Ask the experts and you will find the greatest risk in retirement is longevity – inflation, income, assets, and health all gang up on us. 

The way I see it there is no lifestyle before retirement and another different one after, but one long journey where the early years must be lived with the later years always a consideration.