Embrace A Realistic Lifespan, Live A Happier Retirement

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We’ve all heard it before. Your retirement plan should cover the possibility of living to a very old age. I instead embrace a realistic lifespan which has allowed for not only an earlier retirement but also a happier one. There has been both a financial and lifestyle bump to this mindset. It’s a “live life to the fullest” flavor of mortality salience without the anxiety or fear of what we all know as inevitable. It’s all about coming to terms with a lifespan based on our own unique metrics and maximizing the time we most likely have left. 

Embrace A Realistic Lifespan, Live A Happier Retirement

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When It Comes To Optimistic Planning, I Prefer To Embrace A Realistic Lifespan 

The cautions to plan on funding retirement for extreme old age just never really worked for me. I’ve always been resistant to some common financial advice of calculating retirement planning out to an age over 90 to 100. Certainly everyone’s genetic and genealogical history is unique. In my circle I’ve come across nobody in that age bracket. 

Our unknown longevity is partly what motivated me to retire early. I chose to retire at a younger age instead of holding off with retirement. It’s quite simple to understand the draw. The earlier I retire, then the sooner I can live the life I want. A sooner retirement also means having more time to live a happier retirement. 

How much time we have is the issue that plagues all of us when completing our financial planning. 

Settling on a realistic age to accomplish what we want in life and to financially plan for

Longevity Comes At A Price That Must Be Considered

Obviously when running numbers through a retirement calculator we must plug in the number of years or an end age the portfolio needs to do its thing. Nobody wants to start retirement worrying about long-term financial shortcomings. I’d hear about it being best to set the calculator with enough years to reach age 100. That’s great if you have a portfolio that can support your preferred retirement budget for that long with 100% calculated success results. If you have the bucks, go ahead and plan to live to age 100. My portfolio, not so much.

On the other side, I didn’t want to recklessly cut myself short with an estimated early demise.

My father passed at age 70, his two  brothers both at 45, and his father (my grandfather) at age 32. All had different health related causes that came and took them quickly. I have lived my adult life knowing about the possibilities of an early death. Although I never blindly considered setting myself that short. I know people who had similar family early death dynamic and planned to die young, but I still wanted to concentrate on planning for a realistic lifespan.

As someone who didn’t have a 7-figure portfolio to retire on, I chose a more realistic lifespan for us to calculate against. My 100% retirement calculator success limit was around age 88 and then the percentage of success trailed off after that. I felt reaching even that age was pretty optimistic. It played a part in making my decision to retire earlier than waiting to cover another 10 years of hopeful thinking. I also came to the conclusion that age 85 was a more realistic goal and 90 was more or less padding. It was also easier to retire young believing that this snapshot in time can change with market swings, any additional earned income, or health changes over the decades ahead of me. Now when running numbers my retirement calculator results actually do show 100% success past age 90. But that doesn’t change my actual lifespan.

How I landed on a realistic end age

Family History

There are going to be some people who feel compelled to plan for the long-game because they’ve experienced a rare family member who reached the centenarian milestone. For my wife and I it isn’t a favorable longevity consideration. My wife’s side has a couple who reached 90 and 91. But for the majority of our genealogy, time on the planet is much shorter. If we had family history saying otherwise we would be more inclined to look farther into the age 90 range. We just don’t have any genetic longevity bump in our family history to hang onto.

We can always say we live healthier as a longevity consideration, but should we? I think we’ve also had and have a lot more environmental challenges. Not to mention there are new risks that go with that to offset healthier lifestyle choices. 

Our end date odds- What the professional actuaries tell us 

There are a lot of things that come into longevity play: Environment, where you’ve lived and live, genetics, occupation, income, health habits, healthcare access, risky behaviors, social engagement, social status, etc. Overall, the actuary’s jobs are to weigh an overall mortality value so that their clients, who are insurance companies, the government, pension funds, etc., don’t lose money. Talk about motivation to get something right. Billions of dollars are involved. What else in this world other than big bucks compels as much attention to detail and tested methods? The answer, not much. 

Projected mortality factors also change as we age. When looking at actuarial mortality tables I have an older age actuarial demise than someone younger than I am today. So much for the argument that young people today will live longer than their parents and grandparents. What are these “raise the retirement age to 70” politicians looking at? Apparently living healthier and all of the medical advances isn’t actuarially a positive for longevity vs. today’s new life risks. 

Running our life through a longevity prediction calculator

A closer look at our mortality can be done using a life expectancy calculator. You can plug in your unique lifestyle and yours along with family member medical values to see what your odds are from a medical perspective. We then can weigh its results against the broader high level actuary mortality results found. 

My life expectancy calculation does come out higher than what the actuary mortality tables predict. However, they never ask all the uniquely relevant health questions. Although some of our family members’ deaths have cancer involved because they were smokers, other genetically passed health issues that caused early deaths are not included in the calculator questions. That’s why my wife and I backward pad these results. 

Practicalities of having a realistic lifespan to improve retirement

No matter how we slice it, our longevity never comes close to an age in the upper 90s to 100. Having a delusional fear of realistically contemplating our eventual death or soaking up what financial planners, influencers, or politicians try to tell us doesn’t magically add to one’s true longevity. 

Obviously some of the places that having a reality based lifespan comes into play are financial. The other is evaluating how much time we have because we all want a life with meaningful purpose. It’s clear things can’t continually be put off because our time is fleeting and unknown. 

Financial relief for less retirement stress

Plugging my gender and birthdate into the Social Security life expectancy calculator gives me age 84.

The medically oriented life expectancy calculator resulted in age 92 when answering the questions that it offered. But as I mentioned before, I think it doesn’t ask all of the necessary and unique family mortality questions. An issue that killed an uncle of mine when he was age 45 almost killed me a few years ago at age 61. It wasn’t a medical question included in its calculation. Even though it’s something that I’m now being treated for, it can still come knocking again. That’s why I feel I need to pad back a bit on its results.

Once deciding on a realistic lifespan figure, which I’ve landed on my best case age being 85 to a very optimistic 90, I can feel more confident in using that in my retirement calculations for portfolio funding. 

Another big personal and mortality based decision that must be made is when to start claiming Social Security. 

We pay into the Social Security system our entire working life and can claim our earned retirement benefit as early as age 62, full retirement age which for me is 66.8, a maximized benefit payment at age 70, or any time in between. It basically comes down to this. We can get more monthly smaller checks in life by claiming early, or less overall monthly checks but with a bigger payment amount if we wait. Payment amounts are tied to the actuarial results. The bet by Social Security is we will live to the actuary calculated mortality age. Die earlier and they save money. 

If we die later, depending on how earlier in age we started collecting our benefit we will soar past the break even point and can be left receiving less Social Security payouts overall had we waited to begin payments at age 70. Delaying our benefit start date is betting that we can beat the actuarial table. 

The Social Security break even point is only one side of it. There are other considerations that need to be factored. The amount of our portfolio distribution savings by claiming Social Security earlier and the resulting compounding portfolio gains over the years, the possible later reduction in Social Security payments due to congressional inaction to the projected shortcomings by year 2033, survivor benefit considerations, or some Social Security hating political Jackholes getting their way to end it all together. 

A happier retirement can come with financial relief. 

Using a realistic lifespan may result in seeing that with adjusted reality based financial inputs there’s more room in retirement portfolio distributions to live a little more richly in our senior years. Not to blow it, but share before we pass. My wife and I got to early retirement through frugal living and it’s a lifestyle that works for our happiness. Having room to bring a little happiness to some others we care about who are still in the game is a meaningful win. Which brings us to the second part.

Living a retirement life of purpose

I think many more people are starting to value experiences, family, friends, and living a life of purpose and meaning over just simply a life of accumulating more stuff. For myself, it has been amplified as I age. I prioritize celebrating the accomplishments of my children and grandkids, trying to do things that support my values and my community, looking at issues that unfairly challenged my life and aligning myself to make it easier for others to be victorious who are still oppressed by them today. 

We want to be remembered by our grandkids for what we do with them and for them while we’re still here. Not blindly spoil them, but show them we support their talents and encourage their aspirations. Applying a realistic lifespan approach to the remainder of our retirement allows us to freely do that more than if we were trying to overpreserve funds for a fictitious old age. 

It also lights a fire under our keisters because time is ever shrinking. We know to avoid holding back and not over preserve living, activities, and socially engaging with those we care about for a later or perceived better time. One that we should know is never promised. 

We now make a point to pay more attention to even smaller achievements by living in the moment instead of waiting until something grander that may not ever come. My family knows full well how it can end in an instant. Years ago we suddenly lost our son who passed away at the age of 21 from an unknown health issue. It was a time when we all believed there was all the time in the world to set aside our busy lives to celebrate what we have together. 

What if we beat all the odds and do live to 100?

Nobody wants to run dry of funds before they leave the planet. Once settled on a realistic lifespan we can’t just live on autopilot. Portfolio and budget management still needs to occur. Any shortcomings should be identified before it becomes a critical issue and then make necessary adjustments. 

I also happen to never count our home as part of our overall retirement portfolio. We do have to live somewhere. At some point it won’t meet our needs and we will then enter into that phase of late life planning. So much can and will change over the short and long-term so I am Ok with not having all the answers now. 

The older someone gets, the likelihood of requiring long-term care increases. So far that hasn’t been a big issue in our families as we seem to go earlier or any time in care is very brief. But as I tell my CFP whenever he brings it up, I have a $40 plan for that. A deep hot bathtub and a full bottle of decent bourbon. I know it’s a deflection based on how I feel about quality of life. Our family history has me less concerned about that now. Maybe my feelings will also change on the subject as I grow older and I will pin it down then. Like I mentioned, much can and will change and I’m Ok with not having all the answers about an unknown future. There’s too much to live for today.

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