What is Longevity Planning?

Kathleen M. Manickas, CRPC^®, CDFA^®, Financial Advisor

Spanos Group of Raymond James

Longevity planning is the process of preparing for an extended life span by considering various financial, health, and lifestyle factors.

The Strategy

A longevity planning team can assist to create strategies to manage the challenges that come with an extended life span. The goal is to ensure that the individuals can maintain their quality of life, financial stability and overall well-being throughout a period that may extend beyond their assumed life expectancy by considering the following:

1. Income Strategies:

1. Social Security Benefits optimization includes determining the optimal age for claiming benefits, considering spousal benefits, and employing strategies to maximize lifetime benefits.
2. Pension Plan recipients need to understand the payout options and their implications on retirement income.
3. Annuity Contracts can provide a guaranteed income stream for life, reducing the risk of outliving retirement savings. Various types of annuities should be explored to determine the best fit, including the consideration that the benefit od such contracts outweighs the cost.
4. Income Streams from investments, including dividend-paying stocks, and mutual funds, as wells as interest from bonds, can supplement retirement income and hedge against inflation.
5. Rental Income from owning rental properties can provide a stable income stream during retirement while also building equity in the property.

2. Asset management:

1. Diversification of an investment portfolio can help reduce risk and maintain steady growth throughout retirement.
2. Risk Tolerance assessment and adjustment of investment strategies to ensure that the portfolio aligns with financial goals, within the capacity of the investor.
3. Asset Allocation adjustments to shift to a more conservative investment strategy, as one approaches retirement, may be necessary to protect savings.
4. Portfolio Rebalancing, performed on a regular basis, ensures that asset allocation remains in line with asset allocation
5. Plan for the effects of inflation, which can erode purchasing power over time, making it essential to include inflation protection in retirement planning.
6. Plan to mitigate Longevity Risk by having strategies in place to ensure financial security throughout a potentially long retirement.

3. Advocacy Planning:

1. Trusted Contact is a person authorized by a client of a financial firm to contact, in limited circumstances, to help the firm assist a client, especially if there is a concern about financial exploitation or the client’s well-being.
2. Legal Documents:
   1. Powers of Attorney is the document in which a person (the principle) grants another person (their agent) the authority to make decisions on their behalf.
   2. Healthcare Powers of Attorney and Living Will is the document that a person designates an agent to make healthcare decisions on their behalf, in the event of incapacitation
   3. Last Wil and Testament is a legal document that expressly directs one’s property and asset to people or organizations upon their death.

4. Healthcare Planning:

1. Adequate Health Insurance is essential to manage healthcare costs in retirement
2. Long-Term Care Insurance to cover the potential costs of extended care service
3. Preventive Health Measures includes adopting healthy habits and preventive behaviors to maintain physical and mental well-being

5. Lifestyle Considerations:

1. Planning for Housing Needs, whether it involves down-sizing, relocating or modifying the current home to accommodate aging.
2. Social Engagement is important to maintain mental and emotional health.
3. Hobbies and Interests provide a sense of purpose and ensure a fulfilling and enjoyable retirement.

The Team

A well-constructed Longevity Planning Team will enable an individual to gather information and receive guidance and should consist of trusted advisors that may include friends who can be of assistance in three areas:

1. Business: Financial Advisor, Estate Planning Attorney, Tax Professional
2. Healthcare: Primary Care Physician, Gynecologist or Urologist, Dentist, Eye Doctor, Dermatologist, Podiatrist, Insurance Specialist 3. Social: Friends, Hobby Groups, Travel Groups, Exercise Clubs

Longevity planning is not a one-time event, but an ongoing process that requires periodic review and adjustment. Staying informed about changes in laws, regulations, and financial markets is essential. Regularly reassessing financial goals, healthcare needs and overall lifestyle preferences can ensure that longevity plans remain relevant and effective. By addressing these factors, individuals can enjoy a secure, healthy and fulfilling life during their extended year.

Self-Reflection Questions:

1. How confident are you that your retirement income sources will cover increasing costs in retirement?
2. What is your method of reviewing and adjusting your investment strategy?
3. Do you have a plan for managing your finances if you become ill, and is your family aware of your plan?
4. Have you thought about how you would pay for unexpected medical expenses or long-term care, if needed?
5. Are you worried about finding purpose and fulfillment in retirement?

References:

1. Chatzky, Jean & Roizen, Michael F. MD (2017). “Age-Proof Living Longer Without Running Out of Money or Breaking a Hip”. Grand Central Life & Style.

2. Financial Industry Regulatory Authority (FINRA) Rule 4512. Customer Account Information. Paragraph (a)(1)(F).

3. FINRA Rule 2165 (a)(3). Financial Exploitation of Specified Adults. Paragraph (a)(3).

4. Marsico, Gennaro A., JD, CFP, CIMA, CRPC (2016). “Replacing Your Paycheck”. Trust Wisdom Publishing.

5. Murphy, Christine Brown Esq. (2022) “Preserving Your Past, Protecting Your Future”. Christine Brown Murphy Esquire

Opinions expressed are not necessarily those of Raymond James. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. The forgoing is not a recommendation.