The members
of the Cadeucis Colloquium, a
discussion group of retired and
semi-retired physicians, sat
together in Dr. Kaplan's living
room overlooking the lake one
recent afternoon. Dr. Kaplan
finished serving drinks and
asked: “Who goes first?”
“I noted in the New England
Journal of Medicine [April
20, 2006 issue] that overall
life expectancy at birth in the
U.S. has reached 77.2,” Dr.
Whiteside said. “We're catching
up with Canada, Britain and
Japan — at last. Of course,
they've always achieved their
superior figures with less than
half of our per-capita cost for
health care. But, let's take
time off from talking costs and
just consider the impact of this
demographic on our thoughts
about aging.”
“Exactly what do you mean?”
inquired Dr. Russo. “Half of the
population living to almost 80
and beyond doesn't seem like a
big deal to me.”
“But it is,” argued Dr.
Whiteside. “We've got to change
our thinking about aging in
general and retirement in
particular. Age 65 is becoming
passé as a landmark, and the 70s
decade is becoming the new last
hurrah.”
This set off murmurings
throughout the little group,
which culminated in a series of
exchanges that revealed a lack
of consensus on Dr. Whiteside's
assertions. Were changing
demographics really altering
retirement?
Dr. Kim refocused the discussion
with a proposal: “Why don't we
look at the microcosm presented
by our own group? We're all in
our 70s, so let's think about
what's happened to our own
members to see if Whiteside's
theory holds for us.”
They all agreed and soon came up
with a profile. Of their
original 25 members, two had
died from cancer (colon and
pancreas, respectively), one had
disabling Parkinson's disease
and one had just entered an
Alzheimer's unit. All the others
were leading active lives, even
the one who had had cardiac
bypass surgery and another who
had survived a minor stroke. By
general agreement, cataract
surgery and joint replacements
were considered only “par for
the course.”
In the end, they had to agree
with Dr. Whiteside. The lucky
majority was pursuing active
lives in their 70s and the age
65 milestone had, for them, been
a mere artifact.
The following week, Dr.
Whiteside summarized this
discussion for his financial
advisor. “Jack,” he said, “We've
got to kick the
‘retirement-at-age-65’ habit and
help those folks who are going
to be healthy and active through
their 70s reprogram their
expectations and planning.”
Better Than Expected
How quickly the world can
change. The “Silent Generation,”
born 1926-1945, including my
co-author, was given that
moniker because of its ability
to carry on despite the ravages
of the Great Depression and
World War II. Retirement was a
gift earned through years of
sacrifice, not an entitlement.
The historic longevity achieved
by this generation was a
surprise to many of its members,
including the group above. As a
result, many “Silents” have
ill-formed plans for retirement
and equally insufficient
finances. What then is the
outlook for this generation of
retirees — and the boomers who
will soon follow them?
Our guess is that three out of
four Americans will reach 65
with sufficient health to carry
on a full life of their choosing
— an extraordinary advance in a
single generation, considering
that when Social Security was
put in place, 65 was the
national longevity rate. So
those odds — three-to-one — are
pretty good.
Going Past Ninety
The updated longevity
calculations suggest that a
65-year-old man today has a 50
percent chance of living to 85
and a 25 percent chance of
reaching 92. A 65-year-old woman
has a 50 percent chance of
living to 88 and a one-in-four
shot at 94. For couples, where
both the man and the woman are
65, there is a 50 percent chance
that one of them will make it to
92, and a 25 percent chance of a
survivor at 97.
Four Questions for the Oddsmaker
§
Do You Feel Lucky?
Faced with the longevity
facts, how do you “play the
odds” with clients? Tricky
subject, but it's much like
investing — there is both an
emotional and intellectual
angle. Explore best-case,
worst-case and best-guess
scenarios. Help clients define
each of these scenarios for
their families. Be aware that
there are many different
interpretations. For example,
one couple's worst case might be
development of a disability in
both spouses, while another
might consider that situation a
common challenge faced as
equals.
§
Play Each Hand
Delve into each scenario
— best case, worst case and best
guess. What would change in each
scenario with regard to the
hierarchy of top retirement
needs:
Housing
— where do you live?
Care for Daily Needs
— how do you receive the basic
necessities of daily living —
meals, personal grooming,
security?
Location
— where is your home relative to
family, activities?
Lifestyle and Activities
— what do you do each day, for
vocation, recreation, travel,
enjoyment, hobbies?
For example, a best-case
scenario is typically for both
partners to remain in their home
of choice — probably their
current home — and be
self-sufficient for their daily
needs. Their location is their
own choice and their lifestyle
and activities a function of
their interests, energy level
and financial resources — not
something that is dictated by
their physical health.
A best guess is that one member
of the couple will become
disabled at some point,
challenging the status quo —
possibly in all four areas of
need. Housing in a multilevel
home can become impractical for
someone who is disabled, and
special care may have to be
arranged if one spouse cannot or
wishes not to provide needed
assistance for the other.
Location might have to be
changed as well so the couple
can be closer to family, and a
European Elderhostel may no
longer be the ideal vacation
plan.
Contemplating the impact of
disability on each of the four
areas is an important exercise
for you to conduct with a
couple. They will benefit from
discussing openly situations
that can become very real very
quickly — often with emotionally
challenging implications for the
entire family.
§
Spin the Wheel Again
Having explored these
hypothethicals, have the clients
reassess their best-case,
worst-case and best-guess
scenarios. They have likely
acquired new insights into the
potential challenges of
retirement — and perhaps learned
more about what lies ahead. Give
them an opportunity to rethink
their earlier choices and make
adjustments. The revised outlook
will probably be more realistic
— and more valuable.
§
Know When to Quit
There are no sure
winners, and fate has a way of
disrupting streaks of both good
and bad luck. So don't let
clients overthink or overplan.
Neither approach will ensure a
worry-free retirement. As the
Colloquium discussed above,
there is much to be gained in
preparing to enjoy the golden
years, and that means realizing
the potential risks and costs of
a very different outcome than
the one expected. There are some
big winners in the game of life
and a lot of fun to be had along
the way if you can avoid
gambling too much with your
future.
WHEN YOU'RE 65
Your
longevity odds are:
Man
50% Chance
of living to 85
25% Chance of living to 92
Woman
50% Chance
of living to 88
25% Chance of living to 94
Married Couple
25% Chance of living to 97*
* one survivor
Source: Employee Benefit
Research Institute
