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The Future of Financial Planning
Scientific discoveries around longevity and healthy life expectancy are making a profound change to the way advisors help clients plan for a successful retirement. Many decisions concerning retirement income planning are directly connected to life expectancy, so averages and assumptions aren't good enough anymore.
What DECISIONS ARE affected by PERSONALIZED life expectancy?
Social Security
When you claim and the method you choose can greatly impact the lifetime value of the payments you receive from Social Security.
Portfolio Risk
Having a better understanding of life expectancy can help you determine how long you need to plan to have your assets last so you can accomplish your goals. This understanding impacts the amount of risk you may be willing to take.
Product Mix
Which financial products you choose when creating your financial plan can be greatly influenced by the risk you are willing to take. Someone with a long life expectancy and low risk tolerance may choose to have a much smaller amount of their investments allocated to the stock market or may choose other alternatives, like annuities.
Income Expectations
If you have a good idea that you will live longer than average, based on science, you may change the amount of income you receive from your portfolio to extend how long your money will last.
Taxes
Taxes can take a big bite out of the income you receive, so knowledge of tax advantaged or tax free income planning can be better determined with the benefit of personalized life expectancy.
Healthcare Expenses
Healthy life expectancy helps us determine how many years we are likely to need assistance with some activities of daily living. This knowledge allows for planning for the associated expenses, which can be large.