Financial Planning as Life Expectancy Continues to Rise

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Since 1840, when the life expectancy of human beings was about 47 years, people born today come into the world with a statistical probability of living to the age of 88. By the end of the 2000s, what if U.S. life expectancy at birth could be 100 or higher? What does that mean for people who are currently between 20 and 80?

Almost all the answers to that question include positive things like being able to enjoy our grand-children more, taking more trips, experiencing things we once only dreamed of, and generally having more time to live life to the fullest. But what about the money side of the equation? If we all end up living to be 100, will retirement plans, Social Security income, savings and other sources of income hold up?

If you do plan to see triple-digit birthdays, the following income sources will be the ones you’re most interested in tapping:

IRAs and 401Ks

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Tax-advantaged retirement plans are the central part of most people’s long-term financial security. Assuming you retire at age 65 or 70, make doubly sure your IRA or 401K is designed to fund your annual expenses into late old age. When workers set plans up, they often assume that they won’t need much money after age 90 or 95. If you reach the century mark, you’ll need something to cover your daily living expenses, and a well-financed retirement plan could be designed to meet that need.

Life Settlement

A life settlement is a financial arrangement in which you sell your life insurance policy in exchange for some amount greater than its cash value but less than the dollar amount of the death benefit. Many people who find themselves living well past the age of 80 and doing so in top health opt for this strategy. The thinking is, “Why not sell my life insurance policy now and use at least some of the death benefit to cover travel and living expenses?” It’s a valid question and is behind the fact that so many people contact Mason Finance for assistance on pulling money from an insurance policy.

The Small Condo Solution

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Downsizing is the most common way for today’s older folks to save money and maximize their spending power. Typically, that means selling the large house in which you raised several children and moving into a more efficient living space. This line of thinking was behind the great condo boom of the late 1980s and continues to fuel growth in the small home market.

Social Security Income

Still solvent after all these years, the Social Security system is the primary source of regular, long-term income for seniors who have no, or very little, IRA resources. Whether SSA will survive another 50 years is a debatable question, but for hundreds of millions of adults, it is the one guaranteed source of funds in later life.


Financial experts say that fewer than 30 percent of adults expect to have a significant amount of money in a savings account after they retire. One reason is that most working people funnel money into IRAs and other kinds of retirement funds to avoid paying tax on interest that accumulates during their active careers.