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Longevity and Retirement Planning

by Robert W. Tull | March 12, 2015 | Retirement Planning

If you knew exactly how long you would live, what would you do differently? Would you travel more and work less? Would you start your dream business? Would you sell your house and live on a cruise liner? Would you spend all your money, or stockpile it to leave to your loved ones?

In the age of Marvel superhero movies, having the ability to predict longevity would probably be the one of the best superpower skills a Certified Financial Planner™ could be equipped with. That way we could help you plan exactly how much money you need for retirement for the life you would want, and how long you would need it. But alas, I don’t have any superpowers…I don’t even have a crystal ball…but with medical technology today, and genetic history, sometimes our clients can get a peek into their futures.

Benjamin Franklin once said, “…in this world nothing can be said to be certain, except death and taxes.” Although it sounds final, it’s ultimately my job to help you plan for both. For example, I had a good friend, Doug, about my age…a really young guy…who recently passed away. Dough had lived with stage IV non-Hodgkin’s lymphoma for over three years. Depending on a variety of factors, the survival rate for this disease could be less than five years, or more than ten…or even infinite remission. What’s interesting for Doug was that he fell into two columns on the prognosis factor chart – his age (under 60) was a plus for survival rates, while his stage (4) worked against him. But what wasn’t factored into the chart was that Doug was a fighter who believed in prayer and had an incredible amount of optimism. Doug planned on living a long and happy life, and for a while it looked like he was going to be one of the rare success stories; but unfortunately, the disease made a sudden turn for the worst, and he transitioned to Heaven much too soon for all of us here.

This brings me back to my first question… if you knew exactly how long you would live, what would you do differently? And therein lies the problem…even with advanced medical science, no one can predict anything…exactly. So how does a financial planner help someone with a possible limited timeline, plan for the life that they want? How can we make sure that you get the most quality of life out of your money, but also make sure that you don’t run out of it if you should happen to live longer than predicted? No one wants to regret not doing something they longed to do because it might have cost too much…but they also don’t want to risk significantly lowering their standard of living in their later years if they planned poorly and blew most of their retirement on a fleet of speedboats. So how do we hedge that risk?

One option would be to consider postponing taking Social Security benefits until age 70, when you could qualify for the maximum payment based on your salary history. “But what if I die before age 70,” you may ask, “and I don’t get to take back as much of my money as I could have from Uncle Sam?” Well, that’s a potential risk as well…but the trade-off would be having a kind of safety net that would allow you to spend more money in the near future, while potentially preserving a certain standard of living in the long run.

Another option would be the age-old practice of dividing up your money and putting it into multiple pots…say, for example, you take $500,000 and you place 2/3 of it into low-risk investments such as a 10-year high yield certificate of deposit at a government protected bank…and then placing the remaining $167,000 into a low-cost stock market index fund. At a set point you would want to revisit your circumstances for changes, like if your health or finances are better or worse than you expected. Your CFP® can help you decide what to do going forward according to your circumstances.

No matter what, you can always help protect your assets through careful, well diversified investments. And if you can, take yourself on a “downsizing” dry-run…see how you could cut your expenses down the road, and how you would feel if you had to live on, say, half your current income. Could you do it? And more importantly, could you still be happy? As we all know…money can’t buy you happiness…but it can contribute to your happiness. What’s important to remember is, while we can do our best to have a plan in place that takes care of our loved ones should we die, money piled up in a bank won’t compare to the memories you make with your family, and the impact you can have on the world, if you live your life to the fullest…which brings me back to my good buddy, Doug.

One of the things Doug did a year ago – while diagnosed with lymphoma – was go on a 3,200 mile cross-country bike-ride to raise money for an elementary school in Guatemala. Yes, it took money…yes, he took time off from his work…but no, Doug did not regret doing it for one second. And neither will all those kids in Guatemala, and all the friends and family he inspired. Doug may not have had a crystal ball, but he lived each day like a super hero, no matter how much money he had…and from him, I expected nothing less.


Robert W. Tull, Jr. is founder and president of Tull Financial Group, and a CERTIFIED FINANCIAL PLANNER™ professional in Chesapeake, Virginia. With more than 30 years of financial planning experience in Hampton Roads and beyond, he focuses on the areas of investment management, and retirement and estate planning. He also provides highly individualized personal and business advisory services.

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