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While I’ve always considered myself to have a strong work ethic and disciplined habits, a young child (or children) can sometimes throw you for a loop. With the randomness of a child’s schedule (play dates, birthday parties, various activities, along with hearing “Watch this, Daddy!” from two beautiful girls umpteen times a day), I found myself years ago reading a book called The Power of Full Engagement. The subtitle of the book is “Managing Energy, Not Time, Is the Key to High Performance.” As any parent can attest, energy management can be a challenge.
The book cites an interesting study, conducted at Baylor College of Medicine, in which a research team spent four years studying 100 “healthy” people over the age of 64. One-third were still working, one-third were retired yet both active physically and mentally, and one-third were retired yet essentially inactive.
After four years, the third group (inactive) scored significantly lower than the first two, not only on IQ tests, but also on blood flow measured to the brain. Dr. Richard Restak, a neurologist, stated, “No matter how old you may be at this moment, it’s never too late to change your brain for the better. The brain gets sharper the more it’s used.”
A client of mine, who turned 70 last year, is doing just that and giving his brain a good workout. He’s taking a Spanish class at Tarrant County College. He’s taking the course for credit, which means he has pop quizzes, exams, and required time in the Spanish lab just like the other students. I jokingly asked if he was the only person in class over the age of 20, to which he proudly replied with a smile: “No, the professor is also over the age of 20.”
A few years ago when Rod Steward played at Dickies Arena, I invited a charismatic married couple, who are clients, to attend with my wife Courtney and me. Rod Stewart, jamming on stage like a teenager, was in his 70s. My client, singing along and jamming like a teenager in his seat, dancing in the aisles, was in his 80s! He drove to the concert in his recently purchased new Porsche.
As Yogi Berra said, “You can observe a lot just by watching.”
Well, I don’t know if “70 is the new 50” or “80 is the new 60,” but I do know the more I look around, the more I see folks in their 70s, 80s, and 90s leading a very active lifestyle.
The “retire to the rocking chair” mentality is a thing of the past.
I jog on a treadmill at a rec center about once a week, and given the demographics of the occupants in the room, one could easily think it’s a senior center. A few weeks ago, I’m on the treadmill with a relatively fast pace (5.5), and I notice the guy next to me is cruising along at a pace of 5.7. I was impressed. Why? The gentleman, a retired teacher, was 84 years old.
Everything in life is a tradeoff, and the good news is, we’re living longer and living a very active lifestyle in our later years. The bad news is (from a financial risk perspective), we’re living longer.
When FDR created the Social Security system in 1935, average life expectancy was around age 60. People took Social Security at age 65 (the minimum age to take then; now one can take at age 62), and a few years later passed away. Today, people retire at age 65 and often live to age 95. For several thousand years, the needle on life expectancy moved very little, yet over the last 100 years, because of advances in health and civilization, life expectancy has grown significantly.
Longevity is now one of the most significant risks faced by retirees.
Longevity and an active lifestyle during “retirement” suggest a few things:
- There is a necessity to build a sufficient nest egg.
- One needs to be mindful of spending habits (both while working and upon retirement, perhaps especially during retirement).
- Assets should be positioned to minimize the risk of longevity (outliving your money). One of my clients captured the concept well during our very first appointment. He looked me in the eye and candidly stated, “John, help us so that our money will outlive us.”
John Loyd, CFP®, MBA, EA is founder of The Wealth Planner™. For over two decades, he has been providing wealth management advice to small business owners and high-income professionals. Contact him at [email protected]. Securities & Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. All investing involves risk including loss of principal. No strategy assures success or protects against loss.