Carla Seely Column: Longevity Gene & Expenses

[Written by Carla Seely]

Ask yourself a question: if a scientist could create a pill that allowed you to live another 10 to 20 years, extending your lifespan to 110 or 115 years, would you take it?

Well, I can certainly answer that question: definitely not! It doesn’t matter whether the quality of life is there or not, financially I couldn’t afford it. The issue for me is not about living that long, it’s about financing my lifestyle well beyond my working years.

Many of you who have been reading my articles for years will remember me talking about my grandfather, who was fortunate to retire at age 50 and lucky enough to enjoy another 50 years in retirement; it is crazy to think he was retired for 50 years and had the financial capacity to fund it.

So what happens when you decide to retire at age 65 and you are still healthy in your late 90’s? Well, first of all, it would be great news that you made it that far; however, it would also mean that almost one-third of your life would be spent in retirement, and for the majority of people in that situation it means that very little is left in savings to finance retirement beyond those years.

The risk of persons outliving their savings is increasing because the average life expectancy of both males and females is on the rise. With people now living well beyond the age of 90 and with the cost of living continuing to increase, it is essential to plan retirement income for the long term.

Have you had a chance to think about what would happen if you ran out of money at age 91 but required nursing care? Who would pay for that? If you think your children or the government
will fund nursing care costs at approximately $87,000 per year, you may just get a rude awakening at the worst possible time. The only person who is going to fund your retirement is you!

Remember: there are no second chances if you have not covered everything, or anything. It is essential to spend the time now making sure it is being done properly.

Budgeting for retirement is necessary. As you near retirement, start working on a budget. You need to be sure that you will have enough money to make good on your financial obligations and meet your retirement goals. When drafting a retirement budget that works for you, take a realistic look at your current finances, current capital, and precise sources of income during retirement.

It is wise to overestimate expenses rather than underestimate, making sure that you adjust for inflation [the rising cost of goods and services over time] during your retirement. Remember to include thecost of necessities such as food, rent and utilities, transportation, pets, medical expenses, gifts or contributions, entertainment, travel, personal care, and clothing.

You must also determine the growth of your savings, currently and during retirement, as well as all sources of income that you expect throughout your retirement years. Setting the age at which you plan to retire allows you to calculate the amount of your pension benefit that you will receive when you reach that age. The main sources for retirement income tend to be a company pension plan and government social insurance.

During your working years, putting voluntary contributions into your pension plan monthly can certainly help with long-term savings and overall create the additional resources you may need during your retirement years.

At the end of the day, knowing what needs to be done today and anticipating tomorrow will make the transition from your working life to retirement that much easier.

- Carla Seely is the Vice President of Pension, Life, and Investments at Freisenbruch-Meyer. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.

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