How Long Will You Live? Part I
The Question No One Wants to Answer
By Allen J. Davis, CFP® ChFC®
“How long will you live?” It’s a question everyone must grapple with if they want to plan their financial future. Asked out loud, it’s often met with a long silence.
Thinking about our own mortality makes most of us uncomfortable. We hope that our lives end quickly, rather than after a long decline or a health catastrophe. Yet we all know people whose deaths—as well as the months or even years leading up to it—have been painful to witness. As a result, we avoid thinking about our own worst-case scenario.
Based on our client work over the years, I’ve come to believe it’s pretty common to have an aversion to thinking about your own death. Based on what I’ve seen and heard, I have some theories about why this is the least favorite question we ask as part of financial planning.
Having lived as a pair for most, or at least some, of their adult lives, spouses or partners often have a hard time imagining their life alone. Sometimes each member has a hunch about who will die first but acknowledging that would raise issues they haven’t talked about before. What happens if the one who’s “good with money” goes first, and the less financially literate one is left behind to cope? What if the survivor is less adept in other areas: cooking, home maintenance, or maintaining the relationships that bring connection? Sometimes the couple has silently agreed, over the years, not to discuss the health and lifestyle factors—for example, obesity or alcoholism— that make one person vulnerable to dying soonest. Who wants to bring them up now?
Childless couples have an additional reason for dodging thoughts of their own mortality. The birth of a child often sparks a new sense of responsibility to provide for their family should either, or both, parents die. In effect, parenthood forces them to begin thinking about their own life expectancy. But couples without children (or another dependent, such as a disabled sibling or a long-lived parent) can more easily put off those thoughts until much later in life.
People without partners or children may be particularly hesitant to think about longevity, in part because the time period that precedes it could be extremely difficult. Who can advocate for them in the hospital, or take in the mail and feed the cat? Whom can they count on to speak up if it’s time to sell the house, stop driving, or hire a caregiver? While non-Solos often assume their adult children will be there for them, Solos can’t. They need to find other alternatives. Finding good ones can be challenging, however; paying for services, as an alternative, is expensive. Aging on their own may be a frightening prospect, which can lead Solos to avoid thinking about their longevity.
These are people under age 60, for whom the financial planning process may be the first time they’ve had to get dead-serious about their longevity. I jokingly say to clients that when they agree to do a plan with us they are agreeing to live until 100 – I say that’s a “worst case scenario” in that income and assets could well have to last until then and survive what can be the challenges of paying for things like long term care and other health care costs. So for younger people, it may be the first time they can “see” their own death in black and white, laid out in spreadsheets by their financial advisor. For many younger clients, it’s a moment of reckoning that they’ve been avoiding.
Life-expectancy is central to financial planning. No one wants to run out of money before they die. Many, especially those without no natural heirs like children, also want to avoid ending up with a surplus when, if they’d had a better idea of their likely longevity, they might have loosened their purse strings earlier and enjoyed helping the people and causes they care about.
An old song comes to mind – “Let’s face the music and dance!” It is so often true that looking at things with the lights fully on is the best way to understand, normalize and control them. Financial planning is a process that turns the lights on. We like to say that everyone already has a plan –we just don’t always know what it is. But when we do, there are many things we can change if we’d prefer another outcome. The fear of knowing what our plan actually is probably is what keeps us from engaging in a planning process, but if we can face the music, we have a better chance of dancing our way into the future.
Securities and investment advisory services and financial planning services offered through qualified registered representatives of MML Investor Services, LLC, member SIPC, Supervisory office: 300 Whitney Avenue, Suite 600, Holyoke, MA 01040, Tel: 413-539-2000. The Davis Financial Group, LLC is not a subsidiary or affiliate of MML Investors Services, LLC.