Health and longevity are not evenly distributed, and the correlation between longevity and education is nearly perfect. “Functional health deteriorates faster among people who dropped out of high school,” she said. But among people over 85 years old, more than half say they are healthy enough to work.
Rising longevity is not universal. The sad reality is that childhood obesity and the opioid epidemic are combining to curtail longevity for major segments of the middle-age population. Moreover, if disparities in longevity are increasing almost as fast as life expectancy itself, one thing remains constant. “The death rate is still 100%,” she said.
Cognitive decline is slight among those who don’t experience dementia, Carstensen maintained. It is the ability to process new information and novel concepts that erodes. That’s partly because, like an old computer, an older person has a store of knowledge that’s much greater.
On the dementia front, there is good news. Dementia has been declining significantly and is down 24% since 1970. But this figure needs to be understood in context, Carstensen explained. There are more people with Alzheimer’s because there are so many individuals in the target age population today, but the incidence is declining.
Financially, living longer is a game-changer. Survey after survey shows the vast majority of older workers haven’t saved enough to maintain their standard of living in retirement.
In fact, many have saved enough for a 1960s retirement but not the “long retirement” likely to emerge in the 21st century, said Steve Vernon, a retired Watson Wyatt actuary and current fellow at the Stanford Center on Longevity, speaking to attendees at Financial Advisor’s Inside Retirement conference on May 2. Retirees face a binary choice—work part time or reduce their standard of living—unless they can live a very spartan lifestyle.
Many middle-class Americans, folks with less than $2 million, are opting for some compromise between the two choices. At present, the labor market is characterized by an increasingly finite supply of workers, so more employers are willing to negotiate flexible arrangements and accommodate older employees. Home Depot, for example, allows certain older workers to head south for the winter and work part time in Florida stores during the peak snowbird season.
That said, it’s not always easy for retirees to return to work in reaction to a sudden crisis, like a stock market crash. And unfortunately, market downturns often coincide with economic slowdowns or recessions.
One of the easiest ways for retirees to slash living expenses is by relocating. A lot of ink has been spilled about the dramatic reductions in Americans’ ability to deduct state and local taxes since 2018, and the migration to low-tax states like Florida has accelerated.
Often, however, clients don’t have to move very far to adjust their lifestyles. Lauren Locker, who runs Locker Financial in Little Falls, N.J., tells retiring clients to consider moving “if they want a more financially comfortable retirement.” Nearby states like Pennsylvania and Delaware have much cheaper housing and insurance costs and significantly lower tax rates, and clients can remain within a few hours of family and friends in northern New Jersey via car or train. “North and South Carolina are [also] places where clients of mine have fled and thrived,” she says.