This article was published on the New Haven Register on June 24, 2018
Money can help you live a longer life, but the prospect of extreme longevity generates a unique set of problems for the wealthy.
A recent survey by UBS reveals that half of wealthy investors worldwide believe they will live to age 100. As a result, 90 percent are adjusting their spending, investing and charitable giving to plan for a very long-term retirement, according to the second-quarter 2018 issue of UBS Investor Watch, which tracks more than 5,000 people in 10 countries with more than $1 million in assets.
Nearly all of the wealthy investors believe their wealth allows them to lead a healthier than average life, and 53 percent expect to live to 100, according to the survey, titled “The century club: The rising prospect of living ten decades.” This belief varies widely from country to country, with 76 percent of German respondents anticipating a centenary birthday but just 30 percent of Americans possessing such confidence. The U.S. percentage was the lowest among Hong Kong, Italy, Mexico, Singapore, Switzerland, Taiwan, the United Kingdom and UAE. Actual average life expectancy at birth in the U.S. in 2016 was 79, compared with 83 in Switzerland, according to the United Nations.
Financial advisers and Certified Financial Planners (CFPs) say that anyone who anticipates that level of longevity should conduct wealth management and retirement planning for a 30- to 40-year retirement period.
Nine in 10 respondents rank health as more important than wealth, and many are adjusting their finances to best support health. Just over half of the investors rate rising health care costs as their top concern, followed by having less wealth to pass on to their successors (35 percent) and the need to work longer to afford their lifestyle after retirement (33 percent).
Regarding health care costs, U.S. investors are the most concerned, at 69 percent, while just 35 percent of Germans report concern.
Just over 60 percent of respondents plan to give away a higher percentage of their wealth while they are still alive, since their children and grandchildren will also be aging. The lowest percentage is again among U.S. investors, at 46 percent, in contrast with 79 percent of Swiss respondents planning to give away more while still alive.
Nearly 80 percent of the investors believe that work has positive effects on health, and 63 percent say they are, or will be, working past their retirement age. (The U.S. had the lowest percentage of investors who believe work is good for health, at 52 percent, compared with 93 percent in Hong Kong and 87 percent in Switzerland.)
Believing that you will live a long life can help you focus on actions that will ensure financial stability in retirement. Among the U.S. investors, 75 percent plan to change financial habits due to longer lifespans, reporting that they favor equities and real estate as long-term investments.
Eric Tashlein is a Certified Financial Planner professional and founding Principal of Connecticut Capital Management Group LLC, 2 Schooner Lane Suite 1-12 in Milford. He can be reached at 203-877-1520 or through www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Registered Representative, Securities offered through Cambridge Investment Research Inc., a Broker/Dealer, Member FINRA/SIPC.