Orville Rogers is 100 years old and routinely breaks records at track meets around the country. Sure, the World War II veteran doesn’t have much competition in his age bracket, but that’s beside the point.
The point is that Rogers is in his fourth decade of retirement and still running in all the ways you want to be when you hit triple digits: a model of physical, emotional, and financial health. Rogers trained pilots in World War II, then went on to a successful career as a commercial pilot. His experience can help train us all for the future. Today’s retirement is a marathon, not a sprint, and Rogers is crushing it.
“Some people think I run because I can, but that’s backward,” says Rogers from his home in Dallas. “I can because I do.”
If America could just bottle Rogers’s can-do spirit—and his undoubtedly terrific genes—the country might fare a bit better in the decades to come. The world’s centenarian population is expected to grow eightfold by 2050, according to a Pew Research Center report of United Nations estimates, with America leading the pack in the sheer number of citizens age 100 and up. For a couple who are both 65 today, there’s a 50% chance one member will live to be 92, according to the Society of Actuaries.
You can chalk up much of this longevity to the fact that fewer Americans are smoking and dying of tobacco-related diseases. In fact, the cancer death rate has plunged at least 26% from its peak in 1991, according to the American Cancer Society. Medical breakthroughs that extend people’s lives are happening all the time, and it’s hard to say which cure is on the brink of discovery.
That means more and more people will be living the Orville Rogers life in the not-so-distant future. It also means a hefty retirement plan is in order. Think about it: Retire at 60, and you could be living the dream for 40 years. Retire at 80, and you still have two decades to hone your own marathon skills.
Meanwhile, the average savings of workers ages 60 to 64 with a 401(k) is $195,200, according to Fidelity. Is that enough to take most retirees across the finish line? Hardly. And experts are losing sleep over the looming shortfall. “We’re basically in worse shape than we’ve ever been,” says Tony James, executive vice chairman of private equity firm Blackstone and coauthor of Rescuing Retirement.
Rogers retired just before his 60th birthday in November 1977. He didn’t want to stop working then, but the airlines had set the mandatory retirement age at 60. As a pilot, he always knew his career wasn’t fully under his control. He was subject to regular flight tests and medical checkups, and failing any one of them could have put an even earlier end to his career. “I realized I was responsible for my own retirement,” he says. Rogers began socking away savings in a Merrill Lynch account in his mid-thirties, decades before the creation of the 401(k).
Financial advisors used to employ 30 years as their conservative benchmark for retirement planning purposes. They’d tell you to make sure your money would last until age 95, assuming retirement at the traditional age of 65. Now firms have started stretching their timelines.
“We’re definitely suggesting that people look longer than 30 years,” says Christine Russell, senior manager of retirement and annuities at TD Ameritrade.
It’s not that far-fetched to think you may be the next Rogers, and if you’re not adjusting your mindset to reflect that 40 is the new 30 when it comes to retirement planning, now’s a good time to start. Here’s how to prepare for the long road ahead.
Make the Mental Leap
On a recent Saturday morning at the Rubin Museum of Art in New York City, Tao Porchon-Lynch, a diminutive centenarian dressed in fuchsia Lycra, with fingernails and toenails painted to match, stood at the center of about 60 students fanning out in a semicircle around her. She was the highlight of a daylong slate of activities for which yogis had shelled out $175. Like a colorful hummingbird, she bent her right leg and rested her foot against her left inner thigh. Arms extended, fingers flexed skyward, the 100-year-old yoga teacher executed a perfect tree pose.
“When we droop inward, we get old,” Porchon-Lynch told her class.
Along with requisite sun salutations and mindful breathing, the students also got a master class in positive aging. With her big silver earrings and bright blue eyes, Porchon-Lynch radiated energy, beaming in every picture she took with fans after the class. Her secret is simple: Like Rogers, she can because she does. In other words, you can control how you age more than you might think. “The breath of life is in all of us, but most of us don’t use it all the time,” Porchon-Lynch told me after the class.
Like Rogers, Porchon-Lynch embodies physical achievement at a certain age. She was a model and a cabaret dancer and taught yoga to Golden Age Hollywood actresses like Debbie Reynolds and Kathryn Grayson before moving to New York and opening the Westchester Institute of Yoga in 1982, in her mid-sixties. She hasn’t retired fully as we think of it—in fact, her twilight years have sparkled with activity as she has traveled the world to teach. She thinks in the present, which is great for a yoga teacher and anyone wanting to reach a good moment of zen. Retirement planners, however, can’t afford to lose sight of the future.
A big mental hurdle for retirement savers is “present bias”—the human tendency to weigh what’s happening now twice as heavily as what might happen in the future. “The present is real, tangible, but the future is muddy,” says David Laibson, a professor of economics at Harvard University. When you can’t imagine a future that’s decades ahead, it’s hard to feel any urgency to save for it.
Russell of TD Ameritrade employs some psychology to help couples plan for the distant future. She finds that it’s common for people to dismiss the possibility of living to a very advanced age themselves, but to more readily imagine and worry about their partner’s possible longevity. Russell tries to harness that protective instinct to help both partners plan.
The hardest part of establishing an exercise routine or a retirement savings habit is getting started. “We’re always of the mindset that the present time is the wrong time to do the hard work,” Laibson says. We think we won’t mind buckling down as much in the future, but when the future finally arrives, it’s the present, and it’s no easier to get off the starting block.
One way to overcome inertia is to put something on your calendar, Laibson suggests. Choose a fun class at the gym and invite a friend along to make it a date that you’ll feel bad breaking. Make an appointment with a financial advisor, and enlist a friend or spouse to help you prepare for the meeting.
Expect the Unexpected
Today’s centenarians didn’t have fancy tools to help them plan for life after work. After all, the Internet didn’t exist when they were in their fifties and sixties—and neither did retirement, at least not as we know it today. “Before the ’80s, most men were dying in their boots,” says Teresa Ghilarducci, professor of economics at The New School and coauthor with Tony James of Rescuing Retirement.
The financial advice industry still has some catching up to do. Advisors may be urging people to plan for a long retirement, but the tools and products their firms offer assume the kind of smooth, upward career path that’s becoming more of a rarity these days. Consider the online retirement-income calculators that help you translate your current savings into the income you’ll have in retirement.
On its face, this is a good exercise: It’s useful to consider your savings as an income stream rather than a lump sum. The typical calculator asks for your current age and income, assumes that you’ll get small raises each year until you retire voluntarily at age 65, assumes certain market returns, then spits out a projection of how much monthly income your total lifetime savings will generate.
Real life involves a lot more detours. Nearly half of all retirees leave the workforce earlier than planned, often owing to a hardship such as a health problem or a layoff, according to the Employee Benefit Research Institute. Those who reenter the workforce often do so at a much lower salary than they earned before. “Most of the planning software today is still pretty limited on the what-ifs,” says Jerry Patterson, senior vice president of retirement and income solutions at Principal Financial Group. The next generation of tools should help consumers with life’s contingencies, he says. For example, if you decide to move into a lower-paying but more satisfying role when you turn 50, what do you need to do now to make sure you can maintain your standard of living in retirement?
Retirement income calculators can be a helpful starting point to gauge whether you’re on track to retire one day. But don’t stop there. “You can’t just run projections, draw conclusions, and wake up at 85 hoping you have a few bucks left,” says Thomas Mingone, a financial professional with AXA Advisors in New York City.
Instead, make course corrections as needed. Plug in new numbers as your circumstances change, and consider meeting with a fiduciary financial advisor—that is, a professional obligated to put your interests first. When you’re preparing for a marathon retirement, it can help to have a financial coach in your corner.
Also consider auto-enrollment and auto-escalation, two relatively recent additions to the 401(k). About 70% of large companies automatically enroll new workers in their 401(k) plan, making employees opt out of retirement savings instead of opt in, and of those firms, 80% offer auto-escalation, raising workers’ contribution rates automatically on a regular (often annual) basis.
While these innovations have helped Americans save for retirement, they mostly benefit workers of large companies. What’s more, many plans auto-enroll workers to save 3% of their pay, which is much lower than the recommended 10% to 15%.
The takeaway? Save as much as you can, and then save some more, knowing that life happens, and unexpected layoffs, divorce, disability, and health concerns can take a big bite out of your nest egg.
Joe Riha never put his money into the stock market. “I didn’t really know how it worked,” says the Saginaw, Mich., farmer, age 100. What he did know was the soil and how to coax navy beans, squash, and corn from nothing. He also knew how to build things, and today he collects a pension from a carpenters union on top of his Social Security check.
Steering clear of stocks has worked out just fine for Riha. He’s lived a frugal life and stayed out of debt, applying for his first credit card only in his late eighties because he was tempted by a discount at Sears if he opened a store card. “I didn’t buy anything unless I had the money to pay for it,” he says.
Riha’s daughter, Theresa Hoverman, 62, has inherited her father’s thrifty and resourceful nature. But she knows that she won’t be able to avoid stocks like he did. A former bus driver, Hoverman has a pension but isn’t counting on it to meet all her living expenses, so she and her husband have plowed as much as they can into his 401(k). “We’re set pretty well,” she says.
Financial experts agree that tomorrow’s retirees will need a hefty allocation of stocks, both domestic and international, if they want to beat inflation. Even at low levels, inflation is a silent killer. At just 2% annual inflation, the gallon of milk that costs you $3.75 today will cost you $6.79 in 30 years, according to the Society of Actuaries, and at 3% inflation, it will cost more than $9. But that’s not even the worst of it: Medical costs rise at a higher rate of 5% to 6% per year, and as you get older, you access more and more health care.
To outrun inflation, you’re going to need a stock percentage that holds constant throughout retirement, experts say. Forget the old rule of thumb that you subtract your age from 100 to get the allotment that you should have in stocks. Generally, retirees should have between 35% and 55% of their overall portfolio in stocks, says Rich Weiss, chief investment officer, multi-asset strategies, at American Century Investments.
People with healthy nest eggs can afford to stick to the lower part of that range, since their portfolios don’t need to generate as much growth, he says. So what’s a healthy nest egg? The standard rule of thumb for a 30-year retirement is to have 25 times your anticipated annual expenses saved up by the time you retire. If you want to look out 40 years, save up roughly 30 times your annual expenses, Weiss says.
Those without that much will need a more aggressive stock allocation of up to 55% percent, since you’ll need the extra growth that stocks provide over the long haul. You could also consider adding Treasury Inflation-Protected Securities, also known as TIPS, to your portfolio. These special Treasury bonds offer yields that are adjusted for inflation. The bond portion of American Century’s target-date funds for people of retirement age consists of about one-quarter TIPS, Weiss says.
Secure Guaranteed Income
Atricia Lyons Harrington, age 105, of Essex, Mass., has multiple sources of guaranteed income to support her longevity. While Social Security is one of them, it wasn’t originally part of the plan. Harrington wasn’t eligible for Social Security after her long and rich career as a music teacher and supervisor in the Boston public schools. Certain state and local government employees don’t pay Social Security payroll taxes and thus are ineligible. But Harrington, who married for the first time at age 67, now receives benefits on her late husband’s record.
Harrington started teaching in 1937. She says that back then, the school system made women quit when they married. “I loved the teaching, I loved the music, I loved the kids,” she says. “Why should I give that up to housekeep for a man?” While the rules eventually changed, Harrington saw no need to tie the knot until she reconnected with a college beau around the time she retired.
Many of today’s oldest old, including Harrington, Riha, and Rogers, have pensions from their former employers. Tomorrow’s centenarians won’t be so fortunate, unless they worked for the government. Nearly 30% of private-sector workers were covered solely by pensions in 1979, compared with just 2% in 2014, according to the Employee Benefit Research Institute.
Social Security is the only pension that most future retirees will have. The good news is it’s not going anywhere. Unless older adults stop voting en masse, no politician who wants to stay in office is going to propose cutting their only source of guaranteed income.
But as a safety net, Social Security is limited—it replaces only about 40% of the average worker’s paycheck. Tomorrow, it will very likely be less. While you may think retirees collect the money that they paid into the system while working, in reality current workers support current retirees. Back in 1970, there were 3.7 workers for each Social Security beneficiary, but by 2030, there will be just 2.0 workers. This means that Congress will have to either reduce benefits or increase the Social Security payroll tax, or some combination of both, to shore up the program’s finances for the future, according to the Social Security Board of Trustees.
The prospect of reduced government benefits doesn’t sit too well with the reality of longer life expectancies and nonexistent corporate pensions. “People have been left to their own devices,” says Blackstone’s Tony James.
Financial advisors and academics often recommend that savers take matters into their own hands and buy their own pension, in the form of an annuity. These come in many flavors, but the most cost-effective are usually single-premium immediate and deferred annuities.
Deferred income annuities, in which you pay upfront now for income later, are the cheapest way to ensure you won’t outlive your money. According to a quote from New York Life, a 55-year-old male who spends $100,000 on a 10-year deferred annuity will begin receiving $831.31 monthly, or $9,975.72 annually, at age 65, and those payments will continue, indexed for inflation, for as long as he lives.
To be sure, consumers have historically balked at forking over a lump sum to an insurance company. “What if I buy an annuity, then get hit by a bus the next day?” the typical objection goes. Short answer: You lose the money. Longer answer: You should probably view the prospect of outliving your cash at age 85 or 95 as equally catastrophic as getting hit by a bus.
Plan for Long-Term Care
A final consideration for the new retirement marathon is enlisting help for the home stretch. Long-term-care insurance pays for services that people don’t want to think about needing: help with eating, bathing, getting in and out of bed and to the toilet. Between half and three-quarters of people turning 65 will need some form of long-term-care support and services in their lifetime, according to estimates. And Medicare doesn’t pay for it. (The program will pay for limited, rehabilitative stays in nursing homes—say, following a hip replacement—but not for so-called custodial care that helps with activities of daily living.)
Long-term-care insurance has made headlines in recent years for the big premium hikes that insurance companies have imposed on policyholders to correct for underpricing. But the policies issued today reflect corrected assumptions, and these policies are less likely to see future hikes, experts say.
Many older policies offered unlimited lifetime benefits, but today it’s more common to buy a pot of money to pay for future long-term care, which could be delivered in a care facility or at home. Consider a fiftysomething couple in very good health: When the husband is 55 and the wife is 51, they could purchase a policy for a combined $200 a month, resulting in a benefit pool of more than $500,000, or $7,665 per month, for long-term care when the elder spouse reaches age 82 (owing to their policy’s 3% compound inflation rider, the available amount would be less at lower ages and more at higher ages), according to a quote from Matt McCann, a long-term-care insurance specialist in suburban Chicago.
Porchon-Lynch still lives alone, in a plant-filled apartment in New York’s Westchester County, where picture frames and elephant statues line the shelves. She developed a love of the long-lived pachyderms in her native India, which was colonized by France at the time. During World War II, she joined the French Resistance led by Charles de Gaulle, whose picture rests beside more recent photos of her, beaming in glittery ball gowns. She took up ballroom dancing in her late eighties. “It keeps your whole body alive,” she says of the tango, mambo, samba, and cha-cha that she dances with partners more than 70 years her junior—she even competed on America’s Got Talent with a twentysomething in 2015.
Most of the very old eventually need some help—Porchon-Lynch no longer drives and has friends take her to dance lessons and Trader Joe’s—and there’s nothing wrong with that. Generally speaking, you can shorten the time you spend receiving intensive support and services by taking good care of yourself. Doctors call this “compression of morbidity,” the theory that healthy behaviors can shorten the duration between the onset of debilitating chronic illness and death. As Orville Rogers puts it: “You not only live better with exercise, you live longer and die quicker.”
Rogers, a widower, moved into a retirement community about seven years ago. In addition to running, he loves driving a red Chevrolet Camaro he calls “Beth 10,” after his late, beloved wife—a purchase he made at 95.
He also loves vacationing with his three children, 14 grandchildren, and 11 great-grandchildren. They recently booked a trip for next July to a Pennsylvania resort. “I’m enthusiastic about life,” Rogers says. So it’s probably no coincidence, he notes, that he’s enjoyed such a long one: “I can’t help but think that my attitude has played a part.”