Are we in it for the long haul?
Since 1960, the average American life expectancy rose from 69 years of age to 79 years of age, as modern medicine has made treatment more effective, complimented with more time being spent on preventative care, and thus boosting the health of individuals around the globe. The increased emphasis on mental and physical health has also played a large role in this development. Many employers now incentivize their team members to purchase gym memberships, and to reach other fitness goals throughout the year in order to receive bonuses. We live in a proactive society, built on change, in the pursuit of lasting health and happiness.
Longevity in life is comprised of many facets for business owners and individuals, alike. For business owners, it can lead to increased employee retention, increased productivity, and increased bottom line production. It can also lead to increased costs to provide for your elderly employees. For individuals themselves it can be a different story. Yes there is a greater timeframe for peak earnings potential, but as millennials are projected to live 8 years longer than their baby boomer parents, the millennial generation cannot simply “mirror” the plan of success that their parents followed.
With a longer life span comes an opportunity for creative planning for generations to come. According to the World Economic Forum, there is an 8 year retirement funding gap for men, and an 11 year funding gap for women. Pensions primarily drove retirement planning for individuals in previous generations. Over the last several decades, pension plans have given way to alternative means of building the retirement picture. Pension plans now promise one benefit, but are likely to deliver a pension amount that is far lower than what you were expecting, and so we may have a shortfall. The World Economic Forum article further focuses on different retirement readiness metrics, such as having 10 times your living expenses saved up for retirement. This number is not to be a solo metric, but is meant to be combined with key themes to build a plan for an individual.
Planning for longevity has many key themes:
-What is that retirement vision for you
-Who is a part of that vision
-Where is that vision taking place
-Family history of longevity & health
-Long-term care planning
-Length of work life/retirement life
-The legacy that you wish to pass on to your loved ones
Planning for longevity does not need to change from the way previous generation have done it. Planning for future generations needs to add a new chapter to the book. Planning for longevity starts today to address goals and milestones that are in the short term, as well as the long term. We never want to compromise our future goals for instant gratification in the short term. We know that life has ebbs and flows, and planning is meant to be dynamic in order to keep us on track.
Plan early, plan often, plan forward, and let HFS be your second set of eyes and ears for the long haul!
Written by: Justin Hamlin, CFP
These are the opinions of Justin Hamlin and not necessarily those of Cambridge, are for information purposes only, and should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. The strategies discussed herein are not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. However, prior to opening an account, Cambridge will consult with you to determine if your financial objectives are appropriate for investing in the model. You are also provided the opportunity to place reasonable restrictions on the securities held in your account.