Clients who choose to delay their retirement may find that their decision affects more than just their retirement budget. New research published in the Journal of Epidemiology and Community Health found that delaying retirement can actually increase life expectancy.
Many people think that retiring early, eliminating work-related stress, and living the good life is a sure-fire way to live longer. However, researchers observed that healthy adults who retired at 66 rather than 65 showed an 11% lower risk of death from all causes. Even self-described unhealthy adults showed an increase in life expectancy if they continued to work past the normal retirement age.
Delaying retirement for financial reasons has long been an aspect of retirement readiness planning. This new research suggests that, as you create retirement plans with your clients, you may need to factor in a longer life expectancy for those clients who choose to work longer.
Before your clients trade in their pinstripe suit for a Hawaiian shirt and flip-flops, you may need to evaluate how their retirement plan performs at different life expectancies.
The Retirement Analysis Kit (TRAK) has features to help you illustrate scenarios for your clients. The Gap Analysis and Quick Gap tools draw from the IRS life expectancy tables to help you illustrate the effects of a longer life span when you increase the retirement age. Based on the IRS life expectancy tables, TRAK will automatically adjust the life expectancy of your client depending on their retirement age.
Additionally, the Retirement Solutions reports illustrate how your clients’ retirement income will hold up against different life expectancies. Clients with an apparently fully funded retirement may experience a shortfall if they live longer. TRAK can illustrate whether your clients will remain fully funded at longer life expectancies.
It will be interesting to see if additional research confirms these findings. In the meantime, you can use TRAK with your clients to make sure they consider how living longer would affect their retirement plan.