published Thursday, May 29th, 2014

Cleaveland: Unexpected challenges of longevity

By Dr. Clif Cleaveland

An elderly widow, who has carefully managed her resources, becomes increasingly frail and unable to care for herself. She cannot afford a care facility.

Part-time sitters are hired so she may remain in her modest home. Her savings gradually erode over the next two years. She is faced with the choice of selling her home to finance a stay in a nursing home or moving cross-country to live with her retired daughter.

A couple, both in their 90s, can no longer care for themselves because of combinations of chronic illnesses. Their savings are exhausted. They sell their home and relocate to an apartment in the town in which their 70-year-old son lives. He and his wife become the principal caregivers of the pair.

These two examples highlight some of the dilemmas posed by our increasing longevity. Retirees, some in their eighth decade, find themselves as the guardians of their parents and other more-senior family members. The new dependents have outlived their savings. They may have encountered medical expenses for which they have no Medicare or other insurance coverage. Depending upon state of residence, Medicaid is an uncertain resource.

Meanwhile, costs for comprehensive, retirement care have dramatically increased and are now outside the reach of many elderly citizens.

In 1900, the average life expectancy for men was 46.3 years; for women 50.6 years. Vaccines and antibiotics largely accounted for a rise in 1950 to 65.6 years for men and 71.1 for women. By 2000 the average life expectancy for men had risen to 74.3 and for women to 79.7. At each stage, the life expectancy for black men and women lags by several years. There is considerable variation among states. Tennessee ranks 43rd in average longevity.

In 2010, 75-year-old American men had a predicted additional life expectancy of 11 years. Women could expect a further 12.9 years of life. In 2010, 1.9 million Americans were aged 90 and older; the number has tripled since 1975.

Increasing longevity poses issues for individuals, families, Social Security and private and public pension plans.

Individuals will need to rethink their plans for retirement. Instead of anticipating a possible 25 years post-work, they may need to consider financing 40 or more years. A person with the option may wish to work into his or her 70s, if health and the demands of the job permit. More money may need to be directed into retirement accounts.

Families will need to take a detailed look at the finances of senior members whose health or ability to care for themselves may be on the wane. A plan should be in place before a senior's health finally collapses.

Social Security reserves will be stressed as life expectancies steadily climb. Reserves could be built up by slightly increasing Social Security taxes. The retirement age could be slowly increased, although some work is too physically demanding to permit this.

Private and public pension plans must recalibrate their retirement plans to cover additional years of life. The earlier these plans are revised, the less severe the shock to the retirement protocols as work forces near retirement age.

We will need a new emphasis upon "retirement navigators" -- advisors in investment who can assemble updated data related to longevity and apply it to the particular needs of individuals, companies, and governments. Forearmed with such information, we can anticipate a longer future that will not be lived out under a cloud of financial uncertainty.

The complex issues of longevity and affordable retirement are addressed at the website of the Center for Retirement Research at Boston College: www.crr.bc.edu. It is worth a visit.

Contact Clif Cleaveland at cleaveland1000@comcast.net.

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