LIVING LONGER, LIVING BETTER: PART 2
Living longer seems to be the dream of many who have worked toward improvements in medicine, nutrition, and sanitation and continually increase our ability to live longer and healthier lives. Higher living standards help increase global longevity.
Increased life expectancy is generally perceived as a positive trend, but what are the financial implications of living longer? One implication is that current programs in place in our country were not designed for having fewer workers per retiree. Having fewer workers paying into programs that assist retirees with income and health insurance creates a greater burden on current workers. Social Security and Medicare were created many years ago, but not designed for a population mismatch. In November 2015, we already saw some changes to Social Security claiming rules as adjustments needed to happen to make the program remain viable. Policies could face additional reform in the future.
Another financial implication of increased longevity means that a person’s years spent in retirement might also increase. After working diligently in your career, retiring before 62 or 70 sounds pretty ideal. However, one consequence of early retirement means funding 20-40 years of retirement, which is not an easy feat! Those previously mentioned programs could undergo great changes in the future, and cause Americans to adjust the way they plan and think about retirement. With the decline of pensions and increase of health care costs, retirement funding must draw on other sources of income and be able to keep up with rising cost of living. To keep up with a longer, more expensive retirement, current workers need to examine investment and saving strategies to reduce risk of outliving assets and to know how to manage finances into retirement.
For a deeper look into financial implications of living longer, download the Living Longer, Living Better whitepaper.