Research demonstrates what may be the most significant challenge facing our society: A population that is living longer than ever while saving for retirement at record lows. For too long, we have measured life expectancy in number of years—this is longevity. But longevity ignores two more important factors.
One is health expectancy, the quality of our lives as we age. We all have a friend or loved one who may live to 95 but is in poor health, debilitated by disease and barely ambulatory for the final decade of life. The other factor is wealth expectancy.
Living longer creates pressure to save more to fund a longer life in a manner that aligns with our desired lifestyle. Unfortunately, based on the current trend, most Americans are ill-prepared to afford a long life, lived well. To appreciate the importance of wealth expectancy, it requires us to discard traditional views of planning for retirement. To embrace “wellderly,” not elderly. To turn recreation into re-creation. We want to relish the opportunity of doing something we’ve always dreamed of doing so we can wake up and feel good about each coming day.
But the funding component is real. Retiring at 65 with 15 years of retirement assets coupled with a desire to live to 100 (and a belief you will make it until at least 90) creates a gap—a wealth expectancy gap. Enhancing wealth expectancy requires an investment, and the life insurance industry does offer products that protect against dying too soon (death benefits of life insurance) and living too long (income payouts of annuities). But there has to be more. With the foundation of these products and the actuarial horsepower required to price a solution that will effectively enhance wealth expectancy, the life insurance industry has an opportunity to redefine what it means to retire.
It’s not about how long we live. It’s about how vibrantly we will live long. By supporting transformational products, services and ideas to empower enhanced health and wealth expectancy, longer lives lived well will be the new retirement goal for all.
Read the full article at Next Avenue.