Can You Afford to Live to 100?

 

Today’s life expectancies hover just below eighty years, and if you reach the milestone of seventy they jump to the mid eighties. Due to advances in medicine and healthier lifestyles, reaching your nineties or even 100 is more realistic than ever. That's good news for those of us staring down into our seventh decade. But there is a dark shadow cast over this good news: can we afford to live that long?

According to the Alliance for Lifetime Income's Cyrus Bamji, chief strategy and communications officer, one of their recent studies revealed that almost half of those between sixty-one and sixty-five say that they don’t think that their savings will last their lifetimes. Nearly one third are not confident that they will have enough income to cover basic expenses. Forty percent of Americans rely entirely on Social Security for their retirement income.

There are three basic reasons for this alarming situation.

People simple have not saved enough for retirement. This is not to be dismissed simply as millennials spending money on avocado toast and gourmet coffee. In fact, Gen Xers are saving more for retirement than their predecessors. But many people struggle to pay the rent and buy food, let alone set money aside for their future. And even those who are saving aren't saving enough. The average American retires with just over $65,000 in savings. Many have a significant amount of equity in their homes, which will be a huge help, but not enough to close the gap between what they have and what they will need. And for younger people, home ownership seems increasingly out of reach.

This leads to the second problem, which is that nearly half of retired Americans are financially supporting children eighteen to twenty-one and 30 percent are supporting adult children twenty-two to thirty, all from their retirement funds.

Finally, there is the cost of healthcare.  Health care costs make up 10% to 15% of the average older household’s spending. But what you will spend on health care costs in retirement could be less or more — potentially a lot more. A 65-year-old woman typically could expect to pay $3,300 to $7,700 annually for premiums and out-of-pocket medical, dental and vision costs, according to a study by Vanguard Research and Mercer Health and Benefits. But her costs could top $22,000 in some scenarios, the researchers found.

Most financial advisors say that a comfortable retirement should aim to sustain an income of about 80% of your pre-retirement income. Most real people are nowhere close to that. The prospect is so dismal that many people are simply ignoring the problem, the worst possible thing they can do.

This is a problem at a societal level and requires a societal solution. How likely is that given our governments bickering and fixation on building walls. Things like universal wellness systems to promote avoiding illness instead of treating it after it occurs, creative housing solutions and practical education are things that must be tackled on a societal level. 

But what can you do as an individual? A few things. And the sooner you get started the more impact your efforts will have.

Adopt a healthier lifestyle. It's obvious advice, but it bears repeating. If you make an effort to stay active and eat healthy, you'll likely spend less on health care than someone who ignores diet and exercise and has other unhealthy habits such as smoking.

Save more.  Generally speaking, the sooner you start saving for retirement, the better off you’ll be. Even small amounts set aside regularly can amount to a large nest egg thanks to the miracle of compound interest. If possible, increase or max out contributions to your employee savings plan. If that is not an option for you, send yourself a bill every month to pay alongside your mortgage. Become familiar with the many ways that you can tap the equity in your property as you age so that you are not rushed into a bad decision when you are faced with a choice.

Start to live like you are already retired. An easy way to boost your savings is to cut back on your spending. Start by envisioning your retirement and look for costs to cut. If that vision involves downsizing your home or cooking healthy meals at home, begin making those changes now. Consider purchasing a more economical car. These changes will save you money right away. They will also make the transition into retirement easier.

Have an honest talk with your children about money. This may be an extremely uncomfortable conversation for both you and your children, making it easy to put off or avoid altogether. Don't.

There are no easy solutions to a problem this big when you are already in the middle of the problem, but not dealing with it only allows it to become bigger and burdens our children and grandchildren. Healthy aging is not only about your physical health but your financial and emotional health as well. It is time we moved this problem out of the shadows and start to address it.

Is It Time to Treat Sugar Like Cigarettes?

 

In 1964, Surgeon General Luther Terry issued a report on smoking and health saying that tobacco causes lung cancer and is a main contributor to bronchitis, emphysema and other lung ailments. Members of the Federal Trade Commission read the report the day it was released and quickly proposed a mandatory cigarette label that warned, "CAUTION: cigarette smoking is dangerous to your health and may cause death from cancer and other diseases." The legislation ultimately passed by Congress required a warning label with less dire language: "CAUTION: CIGARETTE SMOKING MAY BE HAZARDOUS TO YOUR HEALTH." In 1965, Congress passed the Federal Cigarette Labeling and Advertising Act (FCLAA), which required a health warning on all cigarette packs. In 1970, President Nixon signed the Public Health Cigarette Smoking Act, which banned cigarettes ads on the radio or television. It also required an updated warning on the cigarette packages which read: "Warning: The Surgeon General has determined that cigarette smoking is dangerous to your health." 

In the six decades since the release of the Surgeon General's report on health and smoking the percentage of Americans who smoke has continuously fallen from a rate of 42% in 1965 to an all-time low of 11% in 2021. The results of a February 2023 Centers for Disease Control and Prevention survey found that 57% of U.S. adults now support policies that ban the sale of all tobacco products.

People still smoke of course, and smoking still kills far too many people. Cigarette smoking remains the leading cause of preventable death in the U.S., with tobacco killing more than 480,000 Americans annually and costing more than $240 billion a year in related health care expenses. But the relentless campaign against cigarette smoking ranks as one of the most successful public health campaigns in history.

In comparison, sugar added to sweetened beverages alone kills about 184,000 people every year now. Forty nine percent of the US population is now either diabetic or pre-diabetic and the numbers keep rising. From 2000 through 2020, the US obesity rate increased from 30.5% to 41.9%. During the same time, the prevalence of severe obesity increased from 4.7% to 9.2%. That's right. Nearly 1 American in 10 is severely obese. Obesity-related conditions include heart disease, stroke, type 2 diabetes and certain types of cancer. These are among the leading causes of preventable, premature death. The estimated annual medical cost of in the United States was nearly $173 billion in 2019 dollars.

The average intake of added sugar in Americans' daily diet is about 19 teaspoons for men and 15 teaspoons for women, vs a recommended intake of 12 teaspoons or less.

There is some data to suggest that since added sugar content was required on nutrition lables in 2016 (after a years long fight with sugar producers) Americans have begun cutting back. Maybe it is time to also require a clear, visible warning lable on food just as we successfully did on cigarettes. We will never get everyone to stop smoking or stop drinking sugary beverages. But if we can reduce consumption as successfully as we have with smoking the benefits in the cost of healthcare, lives saved and the quality of those lives might just be enormous.