According to the National Institute on Aging, in 1950 a man retiring at age 65 could expect to live another 13 years and a 65-year-old woman another 15 years. Today, according to data from the Society of Actuaries, there is a 43 percent chance that retirees could live to at least age 95.
Allianz Life conducted a study with the Stanford Center on Longevity to explore the topic of longevity, what it means for retirement planning and how advances are leading people to consider alternative life-path possibilities.
“As Americans come to terms with the fact that they’ll likely live an extra 30 years, they have the opportunity to look back and evaluate their past decisions and consider the newfound possibilities for the future afforded by time,” said Katie Libbe, Allianz Life Vice President of Consumer Insights.
While it's good news that you can expect to live longer in retirement, can you financially afford it? Libbe discussed with FOXBusiness.com what you need to know.
Boomer: How can Baby Boomers plan for living 30 more years in retirement, both socially and financially?
Libbe: We found that people are incredibly optimistic about longevity and also that they have interest in alternative life paths that differ from the traditional and linear “school-work/marriage/kids-retirement” track that has been the de facto life template for generations. When asked to design their ideal longer life, nearly half of Americans said they would prefer a nontraditional model that is unique to their interests – where they might work, take career breaks, go back to school, volunteer and try different things in no set order.
Although boomers may not have as great an opportunity to make widespread changes to their life path as younger generations, they can still use the conversation about longevity to consider new possibilities for their retirement years, including encore careers or continuing education. As they explore these new possibilities, they should also think about their financial plan and what it may take to build a strategy that supports an alternative to a traditional retirement.
Boomer: What regrets are boomers finding about chances not taken and dreams not realized?
Libbe: Although the topic of longevity was met with extreme optimism by the majority of boomers – 94% were positive on the prospect of living 30 extra years – the process of thinking about longer life caused many boomers to look back and identify some regrets about choices made and opportunities missed.
Nearly 20% of boomers noted they would “take more risks in life,” a common theme among the one-third of Americans who said they regretted many of their major life decisions. Included among those top regrets for boomers are not following their dreams, not taking risks with their career and not taking risks with their lives in general (new jobs, going back to school, etc.). Nearly a third also said they wish they’d been more gutsy in their choices and done things they really wanted to do.
Boomer: How does this change traditional retirement planning?
Libbe: For many Americans, including boomers, having more time opens the door to new opportunities. Boomer respondents confirmed a desire to explore different life paths: pursuing a dream like starting a new business, having a second career doing something they truly enjoy, volunteering/supporting the environment, or retiring later by working fewer hours but for more years overall. Nearly half of all respondents feel a longer life can enable a totally different view of how and when major life choices are made.
While many Americans expressed interest in embracing the possibilities of a longer life, they also understand the need for better planning in order to fund those different goals/life paths. More than nine in 10 boomer respondents agreed that people will need to be more thoughtful about how they plan for longer lives, and nearly the same percentage agreed that major changes would be needed in how people think about funding longer lives. In addition, a full 94% of boomers agreed that, with 30 extra years, it’s not enough to just put aside money for retirement – people would need a much broader, more goal-specific plan - a longevity plan, that falls outside the confines of traditional financial planning.
Boomer: Is our parents’ “traditional” retirement gone forever?
Libbe: Traditional retirement is not gone forever, but new conversations about longevity are forcing people to consider whether a traditional retirement is truly right for them. Of course, if you prefer spending time on a beach or at the golf course, there is nothing wrong with developing a plan to help you achieve those more traditional retirement goals. But it’s important to understand that there are many other possibilities that come with longer life – from extending your working years doing something you love, to taking a sabbatical now in order to pursue a passion project while you still have the time and energy to make it a reality.
It certainly takes careful planning to achieve these objectives, and most Americans seem to understand that a new paradigm is needed to think about, plan for and fund a longer life. A good first step is to meet with a financial professional and discuss how you may be able to achieve different short- and mid-term goals while saving for retirement, opening up the freedom to try different things, pursue passions and explore alternative life plans.