“No issues loom larger for the financial advice industry than demographics and the aging of the baby boomers.”
– Andrew Osterland, CNBC.com
The baby boomer generation is unique in American history because of its sheer size. For context, in January 2011, the oldest post-World War II baby boomers began turning 65. Since then, roughly 10,000 boomers have celebrated their 65th birthday every day. By the time the last of this generation approaches retirement age in 2029, it is estimated that a full 18 percent of the U.S. will be at least that age.
However, this generation is also unique for another important reason, which is that they are likely to live considerably longer than any generation that has preceded them, thanks to unprecedented increases in longevity during their lifetime. For most of human history, life expectancy changed very slowly, but in the last 100 years or so, it has increased rapidly.
In 1900, the life expectancy of the average American male was 46.2 years. By the time his son was born in the mid-1930’s, the average male life expectancy had already increased to over 62 years. Fast forward to present day and we find that the life expectancy for a 50-year-old is 83 for a woman and 80 for a man.
No generation of humans has ever lived as long as the baby boomers will. This huge increase in longevity will likely have far-reaching, and unexpected implications for our country in the future, but in particular, it will significantly impact how we think about family wealth planning. These people are likely to experience a period of 30 or more years of life following retirement and will need to ensure that they have the funds to live comfortably.
The Longevity of American Women
The increasing life expectancy has a much greater impact on women, as women tend to live roughly five percent longer than men. Today, that means that the life expectancy is 83.5 for a woman and 79.5 for a man, a difference of 4 years. However, as longevity increases for everyone, this gap is likely to continue to increase. The longevity of women is accelerating even faster among those in the top 25 percent of wealth.
Because female life expectancy is longer than male, most wives will outlive their husbands. Women are four times as likely to be widowed, and the average age of widowhood is 59. In fact, nearly 30 percent of Americans over the age of 65 live alone, and 69 percent of those people are women.
The outcome of this? Most women will one day have to manage their own finances, which can be a significant undertaking, as they may inherit money from their spouse and parents, but also because more women are earning an income than ever before.
We encourage all women to take an active role in their finances as early as possible. Be aware that there may come a day when your husband is gone and you will have sole responsibility for your wealth. If you are not already preparing for that job, start now! Attend meetings with your financial advisor and ensure that you know and trust them. This may be a person you need to count on during one of the most difficult times of your life. They can offer you the guidance you need now and in the future to maximize your wealth and give you the confidence to enjoy a long and prosperous life.
“Baby Boomers Retire,” Pew Research Center, 29 December 2010, https://www.pewresearch.org/fact-tank/2010/12/29/baby-boomers-retire/. Accessed 10 May 2019.
“Actuarial Life Table,” Social Security Administration, 2013, https://www.ssa.gov/oact/STATS/table4c6.html. Accessed 10 May 2019.