LIFE PLANNING IN THE AGE OF LONGEVITY: INSIGHTS FOR BOOMERS
What steps can people in their 50s and 60s take to best prepare for the rest of their lives? It’s been well documented that many Baby Boomers have inadequate retirement savings. For example, according to the 2016 Retirement Confidence Survey, only 30 percent of workers age 55 and over have accumulated $250,000 or more in retirement savings, while 17 percent have saved less than $1,000.2 For a quick reality check, $250,000 would generate an annual lifetime retirement income of roughly $10,000 per year, using four percent as a rule of thumb for estimating retirement income from savings. In addition to financial issues, many Boomers face serious health challenges due to rising obesity rates, poor nutrition and lack of sufficient exercise.
So it can be sobering to realize that a 60-year-old woman who does not smoke and reports excellent health has more than a 50 percent chance of living another 30 years to age 90, a 33 percent chance of living to age 95 and a 14 percent chance of living to age 100, according to the Society of Actuaries.4 A 60-year-old man with similar characteristics has a 42 percent chance of living to age 90, a 23 percent chance of living to age 95 and an 8 percent chance of living to age 100. Given these odds, it’s not unlikely to think that Boomers could easily live another 20, 30 or even 40 years.
Scientific research indicates that living long and living well is most realistic for individuals who, throughout their lives, are doing well in three domains: healthy living, social engagement and financial security. To this end, Boomers may want to assess their current circumstances and resources to make realistic and supportive decisions about:
- How and when to leave the workforce and retire
- How to best deploy financial resources such as Social Security and retirement savings
- What they can do to improve their health and manage health care costs
- Where they will live and how they will spend their time in retirement
- How they can connect and stay engaged with loved ones and the community
As Boomers transition out of the workforce, there are a number of critical decisions they’ll likely make in the next five to 10 years with potentially lasting consequences for the rest of their lives. Thus, Boomers may need to give careful consideration to these important decisions and be willing to change any suboptimal, yet ingrained, habits. Employers, financial institutions and advisers can all play a significant role in shaping these choices and changing habits.
The Stanford Center on Longevity’s Sightlines Project reviews outcomes in each of these areas that can serve as a helpful checklist of steps that people can take. Discussed below are issues specific to Boomers in each of the three domains; for a complete checklist, see the “Action Plan” brief.