Monthly Archives: September 2018

Will We Live Long Enough to Live a Long Time?

old water skier

September 24, 2018

We have grown used to the idea that life expectancy for Americans will increase over time. Advances in medical diagnosis and treatment, better understanding of the impact of diet, and a relentless media focus on the benefits of exercise, seem bound to produce a lot more people in their 90s, and even centenarians. Recent trends in life expectancy tell a different story. In fact, once all the data has been analyzed for 2017, it is highly likely that we will have three straight years where American life expectancy declined. The last time a three-year decline occurred was in 1916-19, a period which included the end of WWI and a terrible flu pandemic.

Why has life expectancy begun to fall? There is no single answer. There are several diseases and factors which are proving deadlier including diabetes, drug overdoses, pneumonia, and Alzheimer’s disease. One of the main areas of improvement over the last few decades was the decline in fatalities from heart disease, but that has now begun to stabilize. Among the few positive areas are lower numbers of deaths caused by cancer, HIV, and blood infections.

The increasing attention being paid to income inequality has led to more analysis of the impact of wealth. The evidence clearly identifies that people with lower standards of living have higher death rates. This is an area beset with politics, so care is needed when looking at the available information and analysis. One area of contention is whether longer life expectancy for the wealthy is due to purchase of better treatments as opposed to simply living a healthier lifestyle. For example, obesity cares little about wealth, but levels of obesity, and associated health issues, tend to be higher among the less wealthy.

Do the negative overall trends in life expectancy mean that we should change our approach to financial planning for the future? After all, if we are not going to live as long, we will have less need to provide for our retirement. The answer to this question is clear. While overall life expectancy might be declining, people in the wealthier socio-economic groups are still likely to have long lives. Moreover, this group is also the one that takes most advantage of current knowledge to have some influence on how long they live.

So, do not be misled by any news stories about shorter lives. Planning for a long period of retirement remains a vital part of managing our finances. This is especially true for those who follow the advice of our medical profession by staying trim, exercising regularly, getting regular checkups, and avoiding alcohol and drug abuse.

Of course, we all carry the benefit or curse of the genes we are given, and some diseases and accidents are completely out of our control. There is no guarantee that we will need the funds we have set aside for living into our 90s, but we should make some provision. We might just live long enough to live a long time.

Richard Rushton


Joining The Upper Class

Wealth Gold Key Representing Riches And Prosperity

September 17, 2018

Many years ago, when I was a student at Emory University, I was an avid reader of Harper’s Magazine, a snooty New York literary and culture magazine that has been around since the 1850’s. I was a big fan of editor Lewis Lapham because of his impeccable vocabulary and acerbic wit. I remember one article that explored the requirements to be a member of the “upper class.” Several ideas were bandied about including money, education, and the variety of cheeses in your fridge. As I recall, there was extra credit for Brie. As a young man, I had the education, the vocabulary, and the Brie. Garnering the money? That would take a while longer. Mr. Lapham had a considerable head start, as his great-grandfather was one of the founders of Texaco. I’m still playing catch-up.

Fast forward to today and defining wealth remains a subjective topic. Charles Schwab sends out an annual survey that assesses, among other things, how Americans feel about wealth. The survey goes out to 1,000 “demographically representative” Americans aged 21 to 75. Somewhat surprisingly, when asked for their personal definition of wealth, two of the top three answers didn’t involve money: living stress-free (28%); and loving relationships with friends and family (17%). About half of the respondents agreed that saving and investing are the ways to achieve wealth over time. Another 40% identified hard work as the key to building wealth. In the short-run, they identified several things that give a feeling of wealth in their everyday lives: spending time with family (62%); having time to myself (55%); owning a home (49%); subscription services like movie/TV and music streaming (33%); having a gym membership or personal trainer (17%).

Just focusing on the dollars, the participants believed it takes $1.4 million on average to feel financially comfortable and $2.4 million to be truly wealthy. There is a fair amount of disparity among age groups with Baby Boomers saying it takes $2.7 million to be truly wealthy vs. Millennials who say it takes $2.0 million. The Millennials are more optimistic with 64% saying they will be wealthy at some point in their lives vs. 22% for the Baby Boomers. This makes sense. With a longer runway and a shorter hurdle, who wouldn’t be more optimistic?

One factor that wasn’t mentioned is luck. In our line of work, we hear lots of stories of how wealth was gained, and occasionally how it was lost. When listening to these stories I’m struck by how often I hear the word luck. Many times, it’s being in the right place at the right time. It may be that someone could afford to take a crazy risk and it paid off. In any case, there seems to be a lot of truth in the old saying, “The harder I work, the luckier I get.” And there’s more to wealth than money.

Now if someone could invent a creamy soft Brie that won’t raise cholesterol levels, that just might be the path to true wealth.

Mike Masters