The Curious Case of Longevity
Recently, I listened to a podcast that suggested that we will start living longer (100, 120, 150) than at any point in human history.
It is hard to fathom because we probably don’t have much personal history of knowing centenarians.
As I write this note, I am 41 years old.
Why am I thinking about longevity today?
I think there are huge financial implications for today and how we deploy our own personal capital.
Did you know that most financial planner software defaults on running a plan to age 90 or 95 years old?
The financial planning community at-large is not thinking about longevity and how it affects our capital deployment today.
Planning to 100+ Considerations for Today
- Ownership in companies (stocks) with an increasing stream of dividends.
- Lifetime annuities (allow us to transfer the risk of outliving our money to another company that is contractually obligated to pay us).
- Real Estate provides the potential for a rising stream of future income.
- Make sure long-term care insurance is in place. You may not be able to self-assure over a longer time horizon.
- Invest in your health today before it becomes an expense later.
Big Risks
- Owning Target Date Funds that change from stocks to bonds too early in life.
- Owning too many fixed-income investments.
- Not having a plan for rising income in perpetuity.
- Not planning for potentially six decades of inflation.
The Easiest & Most Efficient Way to Grow Income?
☑ Regardless of the randomness of returns in the stock market, dividends from the S&P 500 have consistently risen over time.
☑ The historical dividend growth rate from the S&P 500 has grown by approximately 6% per year over the past 50 years.
Reiterating the Know My Plan Process
- Keep six months of expenses in an emergency fund, plus money for any upcoming major purchases.
- If you need money from your portfolio, we suggest keeping five years’ worth of portfolio income in fixed income.
- Invest the remainder for growth.
You and your family deserve a plan that pursues endowing an ever-increasing stream of income for you and your family.
Keep investing for long-term appreciation, growing income, and your health!
That could be eating organic food, getting an unlimited yoga membership, hiring a personal trainer, or starting daily walks.
Planning to create intergenerational wealth might be the only way to fund a “normal retirement” that focuses on you maintaining your independence & dignity throughout your lifetime.
If any of your friends or family have financial questions, we are happy to be a sounding board for them. If they are important to you, they are important to us.
–Nic & Jeff
We are a full-service financial advisory company that allows you to make a one-page plan for your money and prepare for your future. Learn more about what we do and how we can help you here.
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* Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly. Stock investing includes risks, including fluctuating prices and loss of principal.”
