This coming February, 2014, our family will be gathering in central Indiana to celebrate a centenarian life. My grandfather will be turning 100 and I’m sure there will be a festive party at the retirement community where he lives. What makes this even more remarkable is that he will be the second member of his family to reach this age. His sister is still alive and kicking at 102.
Both are generally healthy for their age and maintain an active lifestyle (as much as possible for a 100-yr. old). My grandfather, a preacher all his life, still helps lead church services for the other retirees and is an active writer in his journals. His sister still enjoys playing pool in the rec-hall basement. They both tune in every day to watch the Chicago Cubs play and then rehash the game with one another.
While living to 100 is still not the norm, their longevity represents a growing trend in the U.S. and the rest of the world. People are staying healthier and living longer. In fact, the Population Division of the United Nations estimated in 2012 there were 316,000 centenarians worldwide, with the U.S., Japan and China leading the way with the most.
This becomes even more pronounced when it is compared to statistics from the 1930s, the decade Social Security Act was passed into law.
In that decade, the average life expectancy (from birth) was 58 for men and 62 for women according to the Social Security website. Interestingly enough, the retirement age was 65. So neither gender was expected to make it to retirement age when they could start receiving benefits, although many obviously did. Today however, if a man or woman reaches the age of 65, they can expect to live another 15-20 years respectively.
With the increase in life expectancy one would think that people are also planning better to cover the financial costs of these extra years of living. Sadly, that does not seem to be the case. According to a recent study entitled “The Retirement Savings Crisis: Is it Worse Than We Think?” from the Washington, D.C.-based National Institute on Retirement Security, the average American has little savings. Those that are 10 years away from retirement have a median retirement savings of $12,000. Of those between the ages of 55-64, one-third has not saved a thing for retirement.
Those are amazingly unfortunate statistics.
So what can people do to be better prepared?
For starters, people need to develop a culture of saving, as opposed to spending. By and large, people are focused on immediate needs. They fail to delay gratification and recognize how their day-to-day decisions will impact them 20 or 30 years from now. Overspending in the present will cripple your financial future.
Secondly, there needs to be a focus on lowering debt levels. Income is generally reduced during the retirement years so there will be less financial resources to go around. It’s therefore imperative to eliminate whatever debt possible pre-retirement. This will allow retirees to use their money for other necessities such as adequate housing and health care.
In addition, if projections indicate you will not meet your retirement goals by the designated retirement age, you may have to consider working longer, perhaps into your early 70s. The extra income generated in those years could provide the cushion of support you need.
Finally, do the proper things now to maintain a healthy lifestyle. Health care costs generally increase into the retirement years. So whatever can be done in the present to reduce those future costs will be beneficial to one’s financial picture.
Life is lasting longer for our culture as a whole. I’m doing all these things and more to prepare for my retirement. Who knows, maybe I’ll be fortunate enough to get my grandfather’s genes and have a chance to join the centenarian club.
Has anyone in your family reached 100? What stands out about their life – financial or otherwise? What is the biggest thing you are doing today to plan for retirement?