Close

Life Spans, Health Care Costs and Rethinking Retirement

Three out of four affluent Americans would change how they approach money management if they knew they would live to be 100, according to the Merrill Lynch Affluent Insights Survey. Respondents said they would continue working at least part-time and/or re-evaluate their saving and investment strategies if they knew they would become centenarians.

The survey asked more than 1,000 individuals with investable assets of $250,000 or more about their goals and concerns. Many respondents cited the uncertainty of longevity and health care costs as key challenges to their investment strategies. Rising health care costs were cited as a top concern by 79% of respondents. Sixty percent were concerned about ensuring they have enough assets to last throughout their lifetime.

Many respondents said they do not expect to have a source of lifetime income beyond what is supplied by Social Security. As for pensions, just 38% of those under 50 anticipate or currently recieve a pension (versus 57% for those over age 50).

Respondents appeared willing to redefine traditional retirement. Nearly four in 10 would continue to work at least part-time in retirement if they knew they would live to age 100. More than 50% of respondents who had yet to retire planned on either cycling between work and leisure or working in a job they enjoy more (part- or full-time). Just 14% of respondents over the age 50 said they would retire once they hit a certain age.

Notably, providing for children and other family members was a priority. Only one in four respondents said they would be willing to leave a smaller inheritance to ensure they had enough assets to sustain them throughout retirement. Similarly, only 15% of respondents who were planning to retire in the next five years said they would be willing reduce financial support to their adult-age children in exchange for boosting their retirement savings.

With average life spans increasing, it is becoming more important for investors to consider that they could live longer they originally anticipated. This means planning for both near-term and long-term needs.

Source: “Merrill Lynch Affluent Insights Survey,” February 22, 2012, Merrill Lynch Wealth Management.


Discussion

Neil from PA posted over 2 years ago:

Seriously stupid article reflective of why Merrill Lynch went under and had to be bought by Bank of America, in itself a fate worse than death.

It might be interesting to know what percentage of the population actually reaches age 100 and how many might be expected to 30 years from now. If Western civilization lasts that long.


E from NM posted over 2 years ago:

We all are "wide-eyed" before an event happens in life - then after the event we face reality. We have these high expectations about how we are going to spend our retirement money UNTIL we actually retire.

Let me just say - plan a lot before retirement and during retirement but know that the plan changes more often than one would think. But that just says - keep moving forward and don't look back. Retirement is a great time of life.


Ruth from OR posted over 2 years ago:

There are many people right now who are living longer than they anticipated and are trying to live on social security. Mostly, it is older women who did not work outside the home, are widowed, and have meager resources. It is very important for women particularly, to plan to live to 100 or longer. If we die earlier than 100, our children or our charities will inherit more but we will have been self sufficient to the end.


You need to log in as a registered AAII user before commenting.
Create an account

Log In