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Planning for 120

Planning for 120

Financial planning for longer lives

Lynne:  Today I have the pleasure of listening in on a conversation between Dr. Stephen Gasior, our Science of Aging expert, and his friend Chip Beal, a marketing professional.  Stephen?

Stephen:  Thanks Lynne. It's really a pleasure to have Chip here. After the first Ageless Mind Project podcast on the Science of Aging, in which we talked about how people will most likely live healthier, longer lives, we said we wanted to engender a lot of interesting conversations on the topic. Not long after that Chip, a friend of mine since before grade school, came to me with some interesting questions about stuff I hadn’t considered. Chip, what were some of those initial interests that you had in aging, and what got you thinking about talking to us?

Chip:  Thanks Stephen. What fascinated me was the question of what would you do, how would you plan, if you were going to live to be 120? What were the implications when it came to retirement? When could I retire? And what would be the domino effect when it came to educating people about financial planning?

Often times people don't think about financial planning until they're getting ready to retire, so my questions revolved around how living to 120 would change that. How would things like Social Security, and the age at which you could start claiming it, be changed or pushed back? Every time I thought about one thing it led to the next. For me, the big piece is financial literacy. There is such a large gap now. Think about how living to 120 would affect health from a physical standpoint, but also the impact it would have on finances. What would have to happen from a financial standpoint to prepare people?

Stephen: Yeah, and I think those are really important questions. Let's step back and think a little bit about retirement in the Western World. What do we consider to be the standard play of action? Typically we assume we'll start working in our 20s or maybe a little bit later - go through college, then work at a job that has the combination of both. In the old days there used to be pension plans. In current days, there is some sort of 401k. You are usually encouraged to put savings to the side, and that can all generate interest and extra value. And then you work, pay for yourself, pay for kids, enjoy life, and then at the age of around 65, after dedicating a lot of full-time work to that job, you retire. Then a combination of the society-wide social security system, which everybody pays into, and then retirement savings. You basically live off those without working anymore. In the old days, I think people typically would retire maybe around the age of 65. Life expectancy in the old days was early 70s, and it slowly crawled back to mid-80s. The amount of money you would need to save is predicated on the idea that you're not earning more money.  From your own point of view, is that kind of how you were thinking most people would approach this? And in terms of your own financial literacy, how would living longer change change your thinking?

Chip: You know, there's a sort of emotional aspect to financial planning - the psychological aspect you talked about. Even if you look at 401K, which I think was a great shift. For the boomer generation it used to be that your company sort of took care of you with pensions. In the GenX generation, much more of the care comes from the 401k side of things. In that piece, the rule of thumb is that you should take about 4% out with the expectancy you will be doing that for up to 30 years. Well that completely shifts when you think about people living to 120. When do those 30 years begin, and how much longer do you have to save? It ends up being a math equation that you've got to think about.

There are other aspects, like societal changes, to think about as well. We're in this sandwich generation. In some cases we're taking care of our parents, who may or may not have have planned for this, as well as our children. You also have a society where that generation is less likely to buy a home than ever before. You're in some cases taking care of multiple generations. Well, extrapolate that out to 120. Now how many generations are living concurrently within your family?  It's fascinating when you think about the societal norms. In the case of my parent's generation, the rule of thumb was you didn't talk about politics, religion or money inside the house. That inability to talk about those things slows the impact of readiness for something like this. So we've got to have some societal shifts to get people talking early and more often.

I spent a lot of time with my kids before college, and now they're in college preparing them for that conversation and making sure that is front and center, maybe even aggressively.  So many people are still in college debt and still don't really know how to get themselves out of those situations, and even though the information is more readily available than ever before. It's still daunting, and again maybe not how they were raised. So financial planning becomes a little bit more of a brick wall for them.

Stephen: Yeah, and I think that is really the main thrust of this conversation. In many cases, if the status quo has been what we described earlier - work until you're 65 starting when you're 20, paying off debt including houses - and retire when you hit 65. What do you really need to plan for? I think the first thing to do is ask is you are living a healthy life, and there are potential interventions that will allow you to a live longer more active life, then really how are you going  to pay for it?  That could last a very long time. I just did a quick calculation on an online calculator. I put in some things that are pretty reflective of my retirement and my age and my income. I said my expected life expectancy was 85 and the calculator said, "You're going to need $2 million for retirement." When I changed that one number from 85 to 100,  it said, "You need $3 million for retirement." Holy cow, that's a big difference in terms of preparing for retirement.

Chip:  Now Stephen, do that for your son at the age of 20 and see what he needs to save if he lives a hundred years. What is that number is gonna be?

Stephen: For the next episode we'll have to look at that. You're raising a really good point. What sort of conversations do we need to have with our kids about what they need to do early on? We talked about this a little bit before and you mentioned compound interest on 4% saved. If you really expect to live longer, and you're in your 20s and 30s, just putting 2% away will get you that compound interest. That can help a lot, right?

Chip: Oh of course. I mean, every little bit counts. You're talking about living healthy and physical exercise and all those things. Those things cost more early and save you a lot of money later, as opposed to the reverse - eating unhealthy, leading a sedentary lifestyle. In some cases that lifestyle is cheaper now, but you pay  for it later.  The idea of, I'm going to be saving more because I need to because I'm going to live longer, but I'm also going to be spending more, there's just, there's just a lot of norms that have to be broken to get people into that mindset.

Stephen: Yeah, I agree. And there are two flip sides when thinking about retirement. If you are living longer, in some cases if you've lived a healthier life up to that point, then hopefully your medical bills are a whole lot less. On the other hand, maybe you're that much more active and want to travel that much more, so a retirement could end up being more extravagant than you originally intended because you're that much more active and ready to go. 

Chip: Buying fresh produce, buying things that cost more because they're healthier or they're naturally sourced, joining a gym, all those kinds of things you would maybe need to do to invest in the first half of your life if you want to stay healthy. That's an investment and often times people don't see it that way. They see it as an expense.

Stephen: Yeah, and coming back around to retirement, an interesting aspect is that if you are going to take a lot of proactive steps - which you really need to do to have a healthy lifespan - along with some other medical or supplement interventions, you're doing this very intentionally. People get very focused on wanting to live longer and healthier, but we need to make sure people are prepared to pay for it. So other than, say, investing early in compound interest, are there any other things you would recommend for people our age (in their 40s and 50s) who are thinking about trying to get into this healthier lifespan. What do they really need to focus on and do?

Chip: Educate yourself as much as you can and open conversations with your family. In some cases that could also be your parents.  If your parents aren't prepared or you have to support them because there haven't been conversations, what are the next stages depending on their level of health? The burden often ends up falling on the generation before them.

Let’s just say that in that scenario you find a way to take care of your parents. You put your parents into a retirement village, or something like that because their health is declining. Maybe they didn't save as well as they could have, and you certainly didn't talk about it until it was way too late. You're in that scenario while also trying to help your kids with college or get their life started. Now you have the scenario where you have a push and pull on both sides, so what does that mean?

Okay, maybe I had a plan and was saving 6% for my retirement. Maybe my company was matching 3%, whatever the combination, and now I'm cutting back on that because I need to get through today. That's going to come back on you at a much later point because of compound interest, because of that kind of planning.  So the more we can do to get ahead of it - the more we can remove the taboo of financial conversations inside of our family, both above and below - the healthier situation you will create.

You might have some terse conversations, but those need to be had. Better to have those now in a neutral scenario than when it has to happen. By doing that and opening up those conversations - potentially bringing in a financial planner who has the ability to help you look ahead - you're using those tools, educating yourself and reaching out. It's no different than if you're out of shape and you don't know how to get healthy. You might hire a trainer. You might read up on those things. You might decide to follow a healthier diet You make a plan.  It's no difference with financial health, and that's something I've noticed at my work. Again, I'm a professional a a large international agricultural company. We have retirement plans and I get lots of emails about meeting with some representative from that company who handles our 401k to discuss life planning in a one-on-one situation. So it does seem to me that between work online, maybe even friends, that there are these avenues for professional help and that the important thing is to really consider scenarios of not only your parents living longer but yourself living longer. Ask how to manage and have realistic expectations.

Stephen: All right Chip. This has been a great conversation, especially because it was something that as we started this Ageless Mind Project podcast we hadn't even considered. If we like this idea of being intentional about living a healthy life, in order to live a longer, then it is probably really important to consider it as a whole and to be intentional about the finances.  Do you have any last takeaway thoughts before we conclude?

Chip: I do.  You know the to-do list you might make every day? This is one where you've got to start with the hardest first. The hardest one is having those conversations that have traditionally been taboo in most families. You must break through that taboo. The longer you wait, the harder that conversation will be. So finding a natural way to start opening up that conversation, and thinking about it for yourself and with your family, is going to improve your financial health hopefully as you live to be 120.

Stephen: All right thanks, Chip. It's been a pleasure having you on the podcast.  A lot of topics that we've discussed that we'll probably have to address in future podcasts.

Chip:  Thank you, Stephen.

Lynne:  And thank you both. This has been a fascinating discussion, and it's raised a lot of interesting questions for me. I hope you will cover them in the future.  To our listeners, what questions do you have for Stephen and Chip, or what topics would you like them to address next time? Put them in the comments below or send them to us at  Be sure to like and subscribe to this podcast and sign up for our email list to get a reminder when a new podcast is posted here.


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Design Your Ageless Mind
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