Have you ever wondered how long you will live? If you look at the U.S. Life Expectancy Tables, an average American male will live to 74.5 years and an American female will likely live to 80.2 years old. In Japan, males are expected to live to age 81.6 and women to age 87.7 years old. Additionally, Canadians, all Europeans, Israelis, Costa Ricans, Chinese, and Saudi Arabians, on average, live longer than Americans do.[i]
With statistics, it is important to know the inputs. The average ages include those who die at infancy or early on in life due to health complications. However, Baylor University recently determined that a person who reaches age 65 currently has a 24.2% chance of living to age 95, and a 9.6% chance of living to (or beyond) 100.[ii] Applying the same math for couples, those numbers roughly double. For a married couple, who both reach age 65, they have a nearly 20% chance that one of them would live to see his or her 100th birthday!
This may make you rethink your outlook on a long, healthy retirement. Often we say, “I’m not going to live that long!” but actually you might! From an investment perspective, when the stock market is volatile, perhaps the best course of action is to take a step back and look at the big picture. Ensure your investments are positioned to win the long-game! Typically, diversification can help an investment portfolio ride out short-term market swings, and capture market rates of returns year-over-year.
Addressing longevity may also include considering health expenses in your elder years. Many may feel financially stable under current conditions, but if health expenses were to increase, their savings could be depleted quickly. In California, the 2022 median cost of long-term care is $6K per month for an in-home caregiver providing 44 hours of service per week, or $12K per month for a private room in a nursing home.[iii] The expenses can add up quickly unless you have a long-term care policy to offset your out-of-pocket expenses.
To address concerns that healthcare costs will only continue to rise, California is expected to consider Assembly Bill 567 in January 2024, where a study group will present a proposal for a statewide income tax to pay for public long-term care benefits. Some Californians might pay more in taxes, and many are concerned that the benefits offered by a public policy will not sufficiently provide for their future long-term care needs. It will be interesting to see whether a state policy paid via taxpayer dollars is preferential to a private policy, where consumers control their own expenses. We’ll have to wait for the details to make a good decision.
[i] https://www.worlddata.info/life-expectancy.php
[ii] https://cdn.bcm.edu/sites/default/files/2013/24/probability65age.pdf
[iii] https://www.genworth.com/aging-and-you/finances/cost-of-care.html