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Financial Planning and Epigenetics – Part 2


By jamesheidema - Posted on 17 November 2014

Based on my previous article where I shared the recent studies concerning longevity of human beings, researchers have found we can and will live much longer than we thought. In the very near future we will see people living to 150 years of age and beyond. In many places of the world we are already seeing indications of this movement towards increased longevity. Regardless of how you feel about your current society or country, this will happen.

As I said epigenetics will have an effect on our individual longevity. To better understand epigenetics, please refer to my article in the previous issue of this magazine or ‘google’ epigenetics.

So let’s examine what living longer means and its implications concerning financial planning.

Today the majority of societies in the world have an economy based on people retiring between 55 and 65. As these retirees leave the work force they make room for new employees to replace them.

As well, if 55-65 is your planned retirement age, then during your working life you will hopefully plan to accumulate enough money so that when you do retire your lifestyle will not dramatically change.

Life expectancy differs slightly country by country. You can ‘google’ to find out the average life expectancy in your country.

Based on your planned retirement age and your life expectancy you will generally know how much money you need to continue your current lifestyle in retirement.

In Canada (where I live), the life expectancy for a male (which I am) is 81 and if I retired at 65 and if my average income is 40,000 euro before retirement, then I would need enough savings to generate 40,000 euro per year for 16 years. To arrive at the real figure I would need to invest a large amount of money, that would earn interest, that I could draw from each year in retirement. It is somewhat complex formula and process, so I won’t address it in this article.

Now here is the problem. A huge problem! What happens if I suddenly live much longer! Instead of dying around 81 in Canada, I don’t die until 150. Wow! Bear in mind for the majority of my 150 years on this planet (according to epigenetics) I will be healthy, not old, broken down or sickly.

So if I could live longer and remain healthy, then I would not retire at 65. Maybe I would retire at 125. I know what you are thinking. You are likely thinking that you do not want to stay at your current job for 50-75 years. Who said you had to? I have changed jobs many times and at age 67+ I just started two new companies. So I have no plans to retire.

Back to my topic! So if people work longer in an economy based on them retiring sooner, then that economy is in trouble and would need to adjust.

If you live much longer than the current life expectancy in your country, then you will need to save a huge amount of money so that you can survive and thrive during retirement.

So what does all this mean to the financial services industry. It means people will need to buy much larger insurance policies to protect their families. They will also need to more aggressively save for retirement. Financial advisors will need to work harder to create a sense of urgency in the minds of their existing and potential customers to satisfy their longer life.

I know what you may be thinking. You may be thinking this will not happen in my country or if it does it will be a very slow process. It is that kind of thinking that will cause you to follow a change rather than lead a change. Epigenetics is not going away and we will see the results of it sooner rather than later in our lives.

Remember ‘Life is change, growth is optional!’