Monday, November 26, 2012

Retirement Age and Other Lies

Today is my (Mel's) 32nd birthday.

That technically makes me the leading edge of Generation Y which, if you ask Chris, is where I belong culturally.

My mother passed away in 2008 from advanced-stage breast and ovarian cancer. My maternal grandparents passed away in the late 1980's and early 90's (I'm sure my uncle will correct me on this) from heart disease and Alzheimer's.

My paternal grandfather passed away last year at 94 from stomach cancer which he refused to treat and he was active up until his death. My paternal grandmother is still alive though now suffering from dementia. She is 92 and still active.

My father is also still alive and working. He's now 71 with no health problems other than those caused by a car accident that almost killed him.

So out of my family tree 2 grandparents died from diseases that are either now much more treatable or completely avoidable, my mother died from a disease that would have been much more treatable if she'd taken care of herself, one grandparent died essentially from old age, and I have one grandparent and one parent still alive. Of those still alive, they are both either very active or in advanced age.

Why is this important?

When anyone talks to me about Social Security, retirement planning, or anything else having to do with long-term planning, I know they're full of shit.

My grandfather lived 29 years past when he started receiving Social Security. My grandmother is at 27 years past "retirement age". They thought they would die decades ago.

When my grandmother was born the average life expectancy for a white female was 58 years. 10 years later the expectancy for her age group was raised to 68. Another ten years later, 71. Another ten years, 75.

When I was born, the average life expectancy for my age cohort was 78. Then 80. Then 81. Now, as of 2008's data, the average life expectancy for a white female my age is 82.

That's a long ways from 65, no matter which way you put it.

On top of that, the CDC mortality data from 2009 is very telling.

The top causes of death in 2009 were:
1. Diseases of the heart, 24.6%
2. Malignant neoplasms (cancer), 23.3%
3. Chronic lower respiratory disease, 5.6%
4. Cerebrovascular diseases, 5.3%
5. Accidents, 4.8%
6. Alzheimer's, 3.2%
7. Diabetes mellitus, 2.8%
8. Influenza and pneumonia, 2.2%
9. Nephritis, nephrotic syndrome, and nephrosis, 2.0%
10. Intentional self-harm (suicide), 1.5%

Out of all of the above, how many causes are becoming either more treatable or more curable every day?

Life expectancy will almost certainly go up.

What does that mean for me personal though? What impact does that have on my life?

When my grandparents were born I would have been considered "middle aged". I might only be through a third of my life (or less) at this point.

My grandparent's generation didn't expect to see Social Security. When my father was born the life expectancy for his age cohort was 62. In 2008 it was revised to 84 years for the same group.

I'm pretty sure almost no man his age could foresee the average age of death being 19 years past the "expected" retirement age of 65. Retirement planning never occurred to them.

My father was 39 when I was born. He recognized he could die any day from that point on. At this point he might live until 95. That's 55 years of "I might die today" or "I might get sick and not being able to work again" or "I might keep trucking for another few decades."

For me, I'm thinking I might die tomorrow, or I might live to see 100. That's 70 years of financial planning, back-up plans, being prepared for ill health, and being prepared for good health. It completely changes how I look at retirement planning, or in my case the likelihood of never retiring at all.

I'm not staring down 65, planning for the day that I am "free" from working. I don't want to spend 30+ years retired. Nor can I afford to, or even expect to make semi-reasonable plans for living without income for that long.

There is no "retirement nest egg" for me. I'll need to plan for stable sources of income for decades to come, as will most of my generation.

The old way of retirement is dead. We need to plan for a completely different way of thinking about the future.