How Long Can You Afford To Live?

107.

One hundred and seven.

That’s how old my friend’s mom was when she died recently.

She was born in 1919, days before the peace treaty ending World War I was signed.

She was a young adult at the start of World War II.

She was middle-aged during the Summer of Love.

She was a senior citizen when Ronald Reagan won reelection in a landslide over Walter Mondale.

Up until her final year, she lived alone in her own home.

It was a remarkable life.

Considering that I help people grow their wealth in order to prepare for or live better in retirement, I couldn’t help but think, “How did she pay for all of those years?”

And, of course, I wondered, “Would I be able to do the same?”

No one expects to live to 107. But who knows? With advances in medicine and the right genes, anything is possible. Three of my four grandparents lived into their 90s, and I certainly maintain a healthier lifestyle than they did when they were my age.

To be honest, the idea of living to 107 scares the heck out of me − and it probably scares my kids even more. (How often would I need them to walk me through how to play my music in the self-driving flying car?)

I’m fortunate that I feel comfortable that I’ll be able to pay for retirement into my 80s and 90s. But 107? That may be a different story.

My generation has it different than previous ones. My dad passed away a few years ago, but he had a great pension and health insurance. Had he lived to 107, he likely would not have had to curb his spending at all. From a financial standpoint, his retirement was mostly carefree.

Most of us are not in that situation. I’m certainly not.

Ever since I was young, I’ve assumed Social Security would not be there for me, and I’ve planned for retirement as if I would have to fund it completely by myself. Hopefully, that’s not the case, but given that Washington is already talking about cuts in 2032, it’s a possibility.

So I’m suddenly thinking about whether my finances could sustain me to 107 instead of my previous assumption of 10 years (or more) earlier.

Here’s how I’m figuring out whether my money can last longer than I previously thought I needed it to.

1. Look at your insurance.

I have a complicated relationship with insurance.

It’s vital for certain things, but I also feel that many of us overinsure.

For example, I don’t carry life insurance anymore. My kids are grown and out of college, and my wife doesn’t rely on my income. For us, there is no reason to pay an insurance company every year.

Instead, that money is invested in the market, growing and compounding over the long term.

If your or a loved one’s death won’t create a financial hardship, think seriously about canceling your life insurance policy and investing the premiums you paid.

I have always felt the same about long-term care insurance. If my wife and I need long-term care, we should be okay paying out of pocket for whatever isn’t covered by our health insurance.

However, that is with a reasonable life expectancy.

Now, granted, we’re probably not living to 107 with health issues that are significant enough to require long-term care.

But who knows? By the time I reach my 90s, maybe dementia has kicked in (some would argue it already has) and I need full-time help or to live in a facility for several years even though my body is healthy. That gets expensive.

Long-term care insurance isn’t cheap, and the older you get, the more costly it usually is.

For some folks, long-term care insurance is a financial lifesaver. If you have an insurance agent that you trust, it’s worth your time to understand the costs and benefits so you can make an informed decision on whether you need it or not.

2. Ask yourself what you need and when.

For years, I’ve told my readers that if they need cash within the next three years, they should take it out of the stock market and put it into something conservative.

As people are living longer, they need more growth to get them to the finish line. That comes from stocks.

On the other hand, when you have fixed costs like a mortgage, rent, etc., that money should be protected so that there is no risk of not meeting your short-term obligations.

3. Be healthy.

Being healthy is cost-effective. The healthier you are, the less it will cost you.

There are certainly many health conditions that are unavoidable, but the risk of various heart issues (and some cancers) can be reduced with healthy choices.

You don’t need to run marathons, but walking every day is incredibly good for you − not just physically, but mentally as well. Various studies have shown a lower risk of dementia among people that are active.

The average annual cost of a skilled nursing home is $89,000 per year. Every year you can put that off is like earning a six-figure salary.

Chronic diseases, like the kind that come from unhealthy habits, lead to more frequent hospitalizations, emergency room visits, and prescriptions. Aside from being unpleasant, those things all cost money too.

I wasn’t particularly worried that I’d run out of money before my time was up. But now that the number 107 is in my head, I need to be sure I’m overshooting the mark when it comes to my finances.

I don’t expect to make it to 107, but I haven’t expected a lot of things in my life. I better get prepared.