How Should the Increased Mortality Associated with Covid-19 Affect Your Retirement Plan?

On July 21, 2021, the U.S. Centers for Disease Control and Prevention (CDC) announced in a new report that life expectancy [at birth] in the US “declined by a year and a half during 2020 due in large part to the coronavirus pandemic.” According to USA today, the decrease from 78.8 years to 77.3 years was the largest drop since World War II. Decreases were much larger for Hispanics and non-Hispanic Blacks than for non-Hispanic Whites.

We’ve Added an Actuarial Balance Sheet Tab to our Retiree Workbooks

Inspired by the Dr. David Blanchett article, “Guaranteed Income Belongs on the Retiree Balance Sheet” and discussed in our post of June 9, 2021, we decided to combine the results developed in several separate tabs of our two retiree Actuarial Budget Calculator workbooks (Single Retired and Couple Retired) into the form of a traditional actuarial balance sheet, which compares total household assets with total household spending liabilities. It is our hope that this balance sheet will give you a different perspective on your finances in retirement and will facilitate your retirement planning. 

Worry Less and Spend More in Retirement

Yes. This is another post extolling the benefits of building a Floor Portfolio to fund your future Essential Expenses in retirement. Recently released research shows that households spend more of their assets if they hold a portion of their wealth as guaranteed lifetime income and not as investments. In addition to providing economic benefits, shifting assets from investments to guaranteed lifetime income can also provide psychological benefits that give households a “license to spend” their assets. So, you can worry less, spend more and achieve your financial goals by shifting some of your assets from investments to guaranteed lifetime income.

Selecting a Financial Advocate You Can Trust

In our post of June 19, 2021, we discussed how cognitive decline can derail your plans to achieve your financial goals in retirement. We suggested in that post that you read recent research available from the Stanford Center on Longevity (SCL) and Society of Actuaries for steps that can be taken to transition financial decision-making to children, family members or other agents on a timely basis.