How Living Longer Will Impact Your Retirement
New medical technologies are on the horizon, making “living to 100” not just a dream anymore, but a reality. Biotechnology has come an extraordinarily long way since the days when antibiotics and chemotherapy were first used. As we enter this science-fiction-like age, the question becomes – “how do I financially plan to live a longer life?”. As biotech continues to advance rapidly, your retirement plan will have to adapt. Here is what you can do to ensure that your retirement is financially stable and enjoyable.
Origins of Biotech
Some of the biotechnology we see and use every day is actually a bit old by science’s standards. The first insulin injection was in 1922, penicillin was first discovered in 1928, and metastatic cancer was first treated using chemotherapy in 1956. In 2017, Harvard medical school reported that the half-life of medical knowledge was between 18 and 24 months. This means that half of everything a doctor learns in medical school is no longer applicable within that time frame. Biotechnology keeps advancing faster and faster.
Why Are Humans Living Longer?
The medical field is changing rapidly right under our noses. Artificial Intelligence has allowed medical professionals to run simulations on virtual patients, stem cell research has had tremendous results in stroke victims, and the manufacturing of drugs is becoming faster and cheaper by the day. Diseases that were incurable a hundred years ago are now completely manageable.
As a result of the rapid improvement of biotech in the last few decades, people are living longer. Statistical modeling shows that a life span of 130 years will be possible by 2100. It’s safe to say that if you practice healthy habits, you could live well beyond your wildest dreams.
Not only are we living longer, but we’re also staying healthier for longer. Folks well into their retirement years are traveling the world, staying active, and doing things that people their age could never do before. Retirement looked very different just a few decades ago. Retirement used to be the years when we would wind down. The elderly’s time consisted of doing crossword puzzles, watching TV, doing crafts, and playing board games. Now, retirement is often referred to as our golden years. It’s our time to travel, discover new hobbies, and do all the things we never had time to do during our working years.
How to Plan for a Longer Retirement
How do we save for retirement, when our retirement could be well over 40 years long? How do you plan for living to be over 100?
We have to start thinking differently about retirement. We need to plan for a retirement that will be enjoyable and longer.
If social security isn’t eliminated entirely, the full retirement age will likely continue to be pushed higher and higher. For many of us, that means we might not be able to completely stop working at age 65. And with all these medical advancements, would we really want to? Companies are recognizing the value of their older workforce, and are opening up opportunities for them to work longer. This includes independent contractor arrangements and greater work flexibility. If you love what you do, it might be a good idea to negotiate some part-time work, rather than quitting entirely. By doing this, you prolong your savings years.
After hearing all of this information, you’re probably ready to break the spreadsheet out and crunch some numbers. Planning for a longer retirement isn’t as simple as just adding 10 more years on and adjusting your savings patterns. Once you get into the distribution phase of retirement, when you are taking money out of your 401(k) or IRA, things can get complicated. If you don’t withdraw money in a very specific way, you’ll incur tax penalties.
If you’re concerned about how living longer may affect your retirement plans, you can talk to the financial advocates at DuPont Wealth Solutions. We will do our best to make sure you meet your financial goals. Call our office at 614-408-0004.
This blog was inspired by the book Life Force by Tony Robbins and Peter Diamandis. Listen to us discuss the book further on Episode 28 of our podcast, Your Financial Advocate.