Life Expectancy. What does it really mean? Will you and your loved ones have enough to live off of should the bread winner pass on unexpectedly?
Life Expectancy is the AVERAGE. It is a MID-POINT.
That means that those who live a “more” healthy lifestyle than others will be expected to live far beyond the life expectancy. The problem with averages is that it doesn’t determine what will happen to you and me.
Who dies early? The smokers, the drinkers, drug users, prisoners and drug addicts to name some of them. It is likely you don’t fit into that group. Its interesting that married couples live longer then singles. (see longevity graph above).
Why is this important to understand? Well, unless you work for the government and have a guaranteed pension, Most Brokers run their retirement income tests using age 90 as the life expectancy, then ran 10,000 Monty Carlo Scenarios, it shows your money is 78% likely to survive to the age of 90, after that it has a 63% failure rate? Just look at the small print below your retirement scenario.
What?!!? Those odds are terrible!
Should that concern you? Well, let’s put it this way, if you were jumping on a plan and they said there was only a 63% chance you’d make it to your destination without crashing, would you still jump on the plane?
Hmmm, I wouldn’t. And either would you.
For those of us who live a half-way healthy lifestyle this should really be concerning because the likelihood that money will be lean or even gone is crazy to consider. What will you do when you are out of money?!? How will you survive? How will the surviving spouse “make ends meat?” The averages suggest: leaving she will have little to nothing in the bank. Literally.
Case and point: There is an article in the Wall Street Journal that tells of a man named Forrest Yeager; at the time of the article he was 91 with less than $60,000 to his name. He was getting less than 1% in his secure investments and didn’t have enough money to live on. It was tragic! He had to resort to extra ordinary methods to survive. He would go to food donations, and senior feeding events and work any odd job he could get his hands on. He is supposed to be RETIRED for goodness sake; enjoying the easy life. He certainly worked hard enough to get there.
Imagine, what would you do if you didn’t know how long you would live, didn’t know how much life’s expenses would increase year to year and only had $60k to survive on?
What a heart-breaking story for me because it can be completely avoided with guarantees. Guarantees have been around longer than you and I have lived! Backed up by State Fiduciary Laws. These same guarantees could have given Forrest a nice lifestyle with guaranteed income for the rest of his life.*
He was trying to survive on less than 1% return because it was a safe; CD return from the bank. Most of us know how much money we have, we just don’t know how the money will work for us. Over half of us believe we can take out 10% of our money when we retire and be OK. New studies suggest that the 4% rule is dead*. In fact the Wall Street Journal says that taking 2% is safe to take out for retirement while not depleting your money during your life. So, if you want to retire drawing out $56,000 per year, how much do you need to have in the bank?
I guess it all depends. For example: The Average of Returns changes when you retire. If your account has performed at 10% per year for life, that doesn’t mean you’ll be able to live off of 5% at retirement. If you don’t know what I’m talking about, its time we talked to educate you on options to diversify your risk and guarantee a future as you want it. Also, if you don’t have a lifetime guaranteed income product in your portfolio, you are at high risk. You owe it to yourself and your loved ones to take key risks off of the table. Eliminate them.
Ask yourself these two questions. They determine, in a large way, if you have success in your retirement. The questions are:
* How much guaranteed lifetime income do you have in your portfolio?
* Have you removed the key risks?
Contact me and let’s design a plan that solves these problems so you never end up like Forrest Yeager. The consultation is free! Most likely you’ll never pay me a dime. My firm is independent-that means I work for my clients, not some company. We are backed by Unions, Federal Agencies, Private Companies and families with a team with many lifetimes worth of experience. Our team, at no cost to you, will find solutions and give you guaranteed odd-beaters.