Living Larger Longer
We are living longer. Yet, demographic changes threaten our retirement plans for prosperity and enjoyment. For those of us who live longer lives, there may be some breathing room for additional planning, both financial and psychological.
The statistics about the coming changes in the labor force and our economy are fascinating. For example, family sizes are shrinking in many developed countries. Both here and in Europe, people of prime work age – 25 to 54 – as a group is not expected to grow significantly. Within just a few decades, 25% of the population of the US will be of retirement age.
Encapsulated in these statistics are the fears of a generation: Social Security, retirement savings, aging with dignity, and sustaining our health. To sustain the social security system additional worker contributions must increase. Without a younger generation expanding the workforce, some pundits doubt the viability of the Social Security system. Moreover, longevity means that many will deplete if not exhaust their retirement savings. Along with longevity comes the challenges of our bodies slowly deteriorating. As we age, health challenges multiply. The coming decades will see fewer Americans working and more who need caregiving, creating a potentially crushing burden on the U.S. economy and welfare system.
And these projections might be wrong. With an influx of immigrants, there will be more workers contributing to the social security system. Fewer people are retiring either because economic concerns keep us working longer or the prospect of retiring is too daunting. Many are staying healthier into advanced age, keeping us active and working into our 70s or 80s.
We can plan to meet these challenges. For those who anticipate a long life, experts recommend that we delay taking social security until after age 70. Deferring social security benefits means a larger monthly payment. With time, assuming the social security system endures, the larger payment will reap significantly better total income. To the extent possible we should take advantage of tax-advantaged retirement accounts: IRAs, 401ks, 403bs, etc. With these retirement accounts, we are better able to build wealth.
We can adjust our attitude toward advanced age. We can learn to adapt our minds to find purpose even if we are less active. Rather than filling time, we can be applying our skills toward making the world a better place – volunteering or teaching. What if the purpose of our lives is to live fully in our later years? With more free time, greater wealth, and a better understanding of the world, mature adults can be change agents for a better future.
To be sure, living a longer life with purpose and comfort requires a blend of proper planning and a bit of luck. As we can’t control our fate, the time to start planning is now.
Evan J. Krame
