Should You Plan for Longevity in the Middle of a Pandemic?
COVID-19 has impacted our daily lives, but long-term financial planning is still imperative
It's a question that I get asked a lot: With the pandemic still in full force, should I be planning to live into my 90s – or beyond?
My answer is a resounding yes. And here's why.
First, we all need to continue to focus on the global health crisis at hand and adjust our daily living practices to keep ourselves and our loved ones safe. That means to keep doing what we've already been doing: washing our hands, wearing a mask, maintaining social distance and staying home as much as possible, especially if we're sick. Those habits are essential to stopping the spread of the virus.
So if you're doing everything in your power to keep yourself healthy and safe, then now is the perfect time to financially prepare for your longevity. While we might expect the opposite, research suggests that in times of crisis, metrics like savings rates and financial preparedness for the future actually increase – in other words, many people continue to save and focus on the years ahead. Research from Fidelity Investments demonstrated this point; in Q2 2020, nearly nine out of ten individuals surveyed who have retirement accounts (88%) made contributions to their 401(k). This was a very slight decrease from Q1, when 89% of individuals made contributions, but enough to rank in the top five averages since 2002.
We found this human inclination to plan for the future held true in our own research. During the first wave of the virus, when COVID-19 was spreading rapidly across the U.S., we surveyed 1,372 men and women between the ages of 50-75. We asked them about how the coronavirus was impacting their daily lives, as well as questions about their overall health, anticipated longevity and financial plans for the next 30 years. We then compared these responses to a survey that we had conducted before the pandemic took hold. We found that beliefs around longevity were remarkably stable, even when daily lifestyles had dramatically changed.
In the March survey, 65% of respondents said that the coronavirus was having a moderate impact on their daily life, and 28% said it was having a severe impact. Further, 53% said it was having a moderate impact on their day-to-day financial decisions, and another 19% responded that it was having a severe impact on their daily finances.
But when asked about longevity, results were virtually the same as before the pandemic. During the first wave, 24% of respondents said they expected to live into their 90s (compared to 25% pre-pandemic), and in both surveys, one in 10 said there was a greater than 50% chance that they would live to 100. These responses are in line with calculations from the Actuaries Longevity Illustrator, which estimates that a 60-year-old non-smoking woman in excellent health has a 53% chance of living to age 90, a 31% chance of living to age 95 and a 13% chance of living to age 100. Even in the midst of turbulent times, older adults are optimistic about living a long life.
Unfortunately, people's concerns over savings and who would support them financially were also the same as pre-pandemic times. In both surveys, two out of three respondents said they worry about running out of money in their later years. But interestingly, there was one change – people who were surveyed in March were more likely to say that their children would take care of them financially if they outlived their retirement savings. Respondents were also more likely to say that their children would make the majority of their financial decisions if they reached their 90s.
This scenario is exactly why we created AgeUp. Longevity is something to celebrate, but the reality is that many people will need financial support if they reach their 90s. AgeUp is a new financial product that provides guaranteed, supplemental income once you reach age 91 or beyond. Small monthly payments stack over time to create an income stream that begins at your chosen payout age and lasts for the rest of your life. And once you begin receiving payouts, the funds can be spent however you wish; there are no restrictions or claims to file.
While the future is uncertain, planning for an exceptionally long life doesn't have to be. Just like we're all making changes to keep ourselves and our loved ones safe in the short term, we can also take actions now that will prepare us for the long term. It's a small thing that can make a big impact – just like wearing a mask.
AgeUp is issued and backed by MassMutual, and sold by Haven Life Insurance Agency, a MassMutual-owned innovation hub. MassMutual has been in business since 1851 and is rated A++ for financial strength by A.M. Best. [Massachusetts Mutual Life Insurance Company (MassMutual) and its subsidiaries C.M. Life Insurance Company and MML Bay State Life Insurance Company are rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of October 30, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.] For additional information, visit our website or check out our frequently asked questions.
AgeUp is a Deferred Income Annuity (ICC19DTCDIA) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Contract and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in Arkansas is 100139527.
Blair Baldwin is the founder and general manager of AgeUp, a first-of-its-kind financial product that fundamentally reimagines how annuities can both materially help the lives of middle class Americans and solve a looming financial crisis facing our country: how to close the gap between life expectancy and retirement savings. Blair and his team developed AgeUp as a new business unit inside Haven Life, MassMutual’s in-house startup. Read More
AgeUp provides guaranteed, supplemental income to help fill in the financial gaps that come with an exceptionally long lifetime. Each small monthly payment to AgeUp "stacks" over time, creating a secure income stream that begins at age 91 - or beyond - and lasts for life. Contributions to AgeUp are shielded from market swings and can be adjusted or paused at any time. Once the selected age is reached, payouts can be used for any expense, with no restrictions or claims to file. AgeUp is a deferred income annuity that is issued and backed by MassMutual and sold by Haven Life Insurance Agency, a MassMutual-owned innovation hub.