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Plan Well, Retire Well

Saving and investing your money

90+ in the United States: Implications for Retirement Investing

The U.S. Census Bureau and the National Institute on Aging have released a report this month titled "90+ in the United States: 2006-2008" that examines the rapidly growing "oldest old" segment of our population. The report describes the demographic, health and economic situation for America's oldest adults.

Some of the main findings of the report include:

  • On average, a person who is 90 today can expect to live an additional 4.6 years compared to 3.2 years for someone who was 90 in the time period 1929-31.
  • A large majority (84.7 percent) of people over 90 report difficulty with one or more physical limitations.
  • There is a steep age-related increasing risk of living in a nursing home. The proportion of people living in a nursing home was 3 percent for people aged 75-79, 11.2 percent for people aged 85-89, and 19.8 percent for people aged 90-94.
  • Women outnumber men by a ratio of 3 to 1, and whites represent 88.1 percent of the 90+ population.
  • Many of the 90+ population live on a low income, and Social Security represents 47.9 percent of the group's income overall.

What are some lessons from this report for people planning and investing for retirement? Three points come to mind. First, keep the longevity risk on your financial planning dashboard. Review your savings rate to see if it corresponds with the possibility of living into your 90s. In any withdrawal calculations review carefully the assumptions about how long your retirement funds might be expected to last. Secondly, carefully consider your timing of entry into Social Security given the chance of a longer life and the importance of Social Security benefits as a source of income over the retirement life-course. Third, check on your plans concerning how physical disability and the potential for long-term care services might impact your financial situation. U of I Extension's Long-Term Care: Talking, Deciding, Taking Action offers information and strategies for incorporating considerations about long-term care into your overall financial plan.

See: He, Wan and Mark N. Muenchrath, 90+ In the United States: 2006-2008. American Community Survey Reports, ACS-17, National Institute on Aging and U.S. Census Bureau. Issued November 2011.

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"Secondly, carefully consider your timing of entry into Social Security given the chance of a longer life and the importance of Social Security benefits as a source of income over the retirement life-course." I have no idea how and why the chance of a longer life impacts the timing of entry into Social Security. Perhaps that is something you could clarify in the future.
by Nancy Mickenbecker on Wednesday 11/30/2011

Hi Nancy:Thank you for posting a comment and I do hope to write more about this in the future, along with the general issue of longevity risk.What I would like people to consider (again) is the issue of when to start receiving your Social Security benefits given the different amounts paid out depending on how old you are when you begin receiving the benefits. I will write more about this, but in general some people may not be appreciating enough the possibility of a long life and the extra benefits they would receive over time if they wait a little longer to start receiving Social Security benefits. For some people planning a retirement this is just not an issue because they don't have much of a Social Security qualifying work history (like me since I work for the University and it is exempt from Social Security). For other people the financial impact over a long-lived retirement could be significant.I hope this is helpful and I will try to write more on this in the future. Thanks for your comment.By the way, it is a beautiful morning in the foothills of the Himalayas in Kathmandu, Nepal today where I am working on extension work for USAID. Sincerely yours, Paul
by Karen Chan on Thursday 12/1/2011

I have had a long-term care policy for about 5 years. I was just billed for 90% premium increase. I filed a complaint with the State of Illinois Dept. of Insurance; the company, John Hancock, actually got regulatory approval for this. I can mitigate the amount of the increase by paring back on the number of years, elimination period or the inflation amount. What do you advise?
by Bonnie Forkosh on Monday 12/12/2011