Very useful to remind folks that expected lifespan is always a measure from your current age, and not the simple expected lifespan upon birth. Interestingly there are some of the same sorts of issues with mechanical systems where the average life of a system upon building might be 5 years, but once it has survived some time (for example 4 years) the new expected life might be another 4 years (for 8 total). A well maintained system will keep on ticking, be it a machine or a person.
Thanks Eric, can always suck a bullet anytime... But seriously, plan to take SS at 70, as longevity insurance, and then does not matter if you live forever. Also good for younger spouse and gives you longer roll over window. Cheers, Jef
Fantastic info Eric; clear, concise and comprehensive. I look forward to each and every week's topic analysis. Great stuff. Now lets get running or rowing !!
You forgot the joint life expectancy of ONE of a married couple.. ie i read a 65 year old Couple.. has a 48% chance of One of them living to 90, and a 19% chance of One of them living to 95.. this is not considering their lifestyle or health or wealth. THIS should give pause to the higher earner taking Social Security before FRA or even 70, since the second to die will have the higher amount longer. However one could safely plan on spending LESS in older (NOGO) years, sans a nursing home.
Longevity and lifespan..yes, key data point, but don’t we have to consider health span as well since that will also affect how much money you will need or use either way…a lot more or a lot less.
A 90% success rate is already pretty conservative, trying to get close to 100% is super conservative, and shows a lack of understanding of longevity and spending. People forget that is is quite easy to adjust spending in old age downward well before “running out of money”. Most people with portfolios forget that a large number of retirees don’t have a portfolio, yet still manage. Social Security CAN be enough all by itself. I spent 35 years working in the healthcare industry, and rarely saw people truly destitute, except those that had always been quite poor. Many successfully lived only of Social Security including both sets of our parents. The converse of this is the retirees who died rich without intending to do so, I also saw a lot of that.
Based on published Social Security Mortality Tables, around 46% of "males" who are 62 years old die before they reach 82. That's almost half. And that is not factoring in modern day risks such as nation-made pandemics, thanks to advances in genetics and biochemistry, plus more dense populations. And, based on my anecdotal observations of old relatives and friends, the odds of a male or female living to 85+ while maintaining both good physical and mental health is very low. Nobody knows when they will die. A few will live to a 100, assuming they are not taking a lot of pills in their 60s. But planning for a 30 year retirement when you are 60+ is a waste of time (unless you want to leave a big inheritance to your heirs.). That's my opinion. You can disagree.
Totally agree. I think one can hedge a bit, but planning beyond 90 is leading to a lot of unspent money, and lost life experiences. Certainly maintaining large cash reserves without a big desire to leave money to heirs is foolish. The easiest and most cost effective plan is to maintain your primary residence and Social Security as the back up plan, and spend down the portfolio while you can still enjoy it. We are planning to spend most funds by age 85.
Very useful to remind folks that expected lifespan is always a measure from your current age, and not the simple expected lifespan upon birth. Interestingly there are some of the same sorts of issues with mechanical systems where the average life of a system upon building might be 5 years, but once it has survived some time (for example 4 years) the new expected life might be another 4 years (for 8 total). A well maintained system will keep on ticking, be it a machine or a person.
Thanks Eric, can always suck a bullet anytime... But seriously, plan to take SS at 70, as longevity insurance, and then does not matter if you live forever. Also good for younger spouse and gives you longer roll over window.
Cheers,
Jef
Fantastic info Eric; clear, concise and comprehensive. I look forward to each and every week's topic analysis. Great stuff. Now lets get running or rowing !!
You forgot the joint life expectancy of ONE of a married couple.. ie i read a 65 year old Couple.. has a 48% chance of One of them living to 90, and a 19% chance of One of them living to 95.. this is not considering their lifestyle or health or wealth. THIS should give pause to the higher earner taking Social Security before FRA or even 70, since the second to die will have the higher amount longer. However one could safely plan on spending LESS in older (NOGO) years, sans a nursing home.
Thanks for taking a look at longevity risk
Its interesting that the factors looked at are: exercise, diet, smoking and BMI because the first 3 are also factors in BMI
Good video and discussion Eric. Larry, Central Valley, Ca.
Always the best videos
Great content, thank you!
Longevity and lifespan..yes, key data point, but don’t we have to consider health span as well since that will also affect how much money you will need or use either way…a lot more or a lot less.
Good video
Can you link the slides?
That morningstar SWR chart at the beginning is only for a 90% success rate. Not "safe" enough for me.
A 90% success rate is already pretty conservative, trying to get close to 100% is super conservative, and shows a lack of understanding of longevity and spending.
People forget that is is quite easy to adjust spending in old age downward well before “running out of money”.
Most people with portfolios forget that a large number of retirees don’t have a portfolio, yet still manage. Social Security CAN be enough all by itself.
I spent 35 years working in the healthcare industry, and rarely saw people truly destitute, except those that had always been quite poor. Many successfully lived only of Social Security including both sets of our parents.
The converse of this is the retirees who died rich without intending to do so, I also saw a lot of that.
Based on published Social Security Mortality Tables, around 46% of "males" who are 62 years old die before they reach 82. That's almost half. And that is not factoring in modern day risks such as nation-made pandemics, thanks to advances in genetics and biochemistry, plus more dense populations. And, based on my anecdotal observations of old relatives and friends, the odds of a male or female living to 85+ while maintaining both good physical and mental health is very low. Nobody knows when they will die. A few will live to a 100, assuming they are not taking a lot of pills in their 60s. But planning for a 30 year retirement when you are 60+ is a waste of time (unless you want to leave a big inheritance to your heirs.). That's my opinion. You can disagree.
Totally agree. I think one can hedge a bit, but planning beyond 90 is leading to a lot of unspent money, and lost life experiences. Certainly maintaining large cash reserves without a big desire to leave money to heirs is foolish. The easiest and most cost effective plan is to maintain your primary residence and Social Security as the back up plan, and spend down the portfolio while you can still enjoy it. We are planning to spend most funds by age 85.