There are plenty of websites that do a pretty good job of projecting how long your money will last, but there are precious few that help you estimate how long you’ll last. One particularly good life expectancy calculator can be found at:
This site contains a brief 40 question questionnaire based on data gathered from the New England Centenarian Study that examined the health habits of centenarians and their offspring. One of the authors of both the study and the questionnaire is world-renowned gerontologist Dr. Tom Perls. After answering the simple questions, you’ll receive an estimate of your life expectancy. If you don’t like the result, you can change some of your health habits to extend your life expectancy. The site also provides some advice and directs you to other web sites that will provide more information and guidance pertaining to a particular health topic.
We especially like this site because it provides a reality check for those many people, both working age and retired, who don’t realize how long they’re likely to live. Life expectancies are rising so we need to plan financially for that possibility.
Smart Money Tips
- Understand how your target date fund is invested. Target date mutual funds are a convenient way to invest in a diversified array of investment categories in a single fund. They are particularly popular for workplace plans like 401(k)s and 403(b)s. Investors generally pick a target date that is nearest the year they plan to retire. While these funds are well-diversified, you should check how any target date fund you are considering allocates its holdings. This is particularly important for those who are planning to retire in the near future. You may think a near-dated fund is conservatively invested, but they generally are not. Consider for example 2025 target date funds. On average, around one-half of the money in the fund is invested in stocks, but the stock exposure ranges from 35% to 60%. Even funds designated as providing “retirement income” have an average of almost one-third of the holdings in stock. I don’t have a problem with those allocations, but I worry that very conservative investors may think that since the target date is very near, most if not all the money will be invested in safe securities. That is not the case.
- Beware of official-looking solicitations. Whether received by snail mail or email, companies posing as official government agencies attract the attention of the unwary. The letters often have scary warnings like a “$2,000 fine, five years imprisonment, or both for any person interfering or obstructing with the delivery of this letter.” Other letters may purport to be from a large financial institution. These shady operators are really trying to sell you something you don’t need. Ignore them. If you have older family members who may be at risk from such chicanery, advise them to contact you before they respond to any such solicitation.
Food for Thought
The one important thing I have learned over the years is the difference between taking one’s work seriously and taking oneself seriously. The first is imperative and the second is disastrous.
Money Can Be Funny
Why is there so much month left at the end of the money?
Word of the Week
quidnunc (KWID-nuhngk) – a person overly occupied with trivial curiosity and gossip, a busybody
Origin: From Latin quid – what and nunc – now; “what now?”
“…anti-intellectual rest homes which taught overadvantaged quidnuncs how to wear rep ties and smile….”
Alexander Theroux, Darconville’s Cat