Are You Ready For 100? BY THE MIDDLE OF THE CENTURY, BETWEEN 800,000 AND 4 MILLION AMERICANS WILL BE OLDER THAN 100. WHAT WILL THAT MEAN FOR YOU?
(MONEY Magazine) – I am 34 years old. On the face of it, there is nothing particularly interesting about this fact--certainly nothing unusual. By current U.S. Census estimates, there are approximately 4 million 34-year-olds in America. All told, there are about as many of us as there are people living in the state of Colorado.
Already, though, I can see that some of my brethren are starting to drop away from the pack. So far, more than 150,000 men and women born in 1966--the year of my birth--are gone, and obviously more will follow. How far into the future until we've all disappeared from the census rolls? This is a difficult question. A quick look at the Social Security Administration's numbers tells me that our chances of living long are good--surprisingly good. Right now, the federal government expects that a man my age should live, on average, to nearly 80 and that the probability of reaching 90 is about 1 in 5. As for the odds of my hitting the longevity jackpot and making it to 100? About 1 in 42. For a woman my age, about 1 in 16.
As it happens, the chances of passing the 100 mark--of joining the ranks of America's centenarians--have never been as good as they are now, regardless of whether you're a Gen X-er nearing 30 or a baby boomer rounding 50. And they may get even better. Centenarians, who now number around 75,000, are easily the fastest-growing age group in the country, and by various estimates, there will be anywhere from 800,000 to 4 million people over the age of 100 in the United States by the midpoint of this century. Joining these folks will be a population of ninetysomethings numbering at least 8 million and a population of eightysomethings numbering at least 20 million. If this is our national destiny--and virtually all of this country's top demographers agree that it is--we've got some novel questions in front of us. Most fundamental of all, perhaps, is this one: If you could live to 90, 100 or 110, would you want to?
Before you answer, think about one other thing. If you did live to 100, could you afford it?
CONFRONTING THE NUMBERS
Among the ranks of longevity researchers, few people have spent more time with America's oldest old than Thomas Perls, an assistant professor at Harvard Medical School who's been running the New England Centenarian Study since 1994. On a snowy, stormy day last December, I visited Perls in his cramped suite of offices at the Beth Israel Deaconess Medical Center in Boston, where he quickly handed me a copy of his book, Living to 100, marveled at the nor'easter raging outside, and launched into an animated discussion of his latest research.
Perls is intent on exploring the lessons that his subjects can teach the rest of us, and if you spend enough time talking with him, you can see that the mysteries and burdens of longevity aren't what you might expect. As Perls explains, "I definitely succumbed in my medical training to the idea that the older you get the sicker you get." As his research has progressed over the years, however, he's come to the realization that most centenarians are healthy and independent well into their nineties. For him, that makes the question of whether someone would want to live to 100 a simple one. "The answer is absolutely yes," he says, "because in order to do so, the vast majority of those years have to be healthy ones. And so no longer do I see aging as some kind of thing to avoid or disdain. I see it as an opportunity."
To be sure, Perls doesn't think we'll all get to 100; he believes that a small symphony of special genes work together to help give today's centenarians their extreme longevity. What's more, trying to pattern your life on these old-timers can be tricky, since they seem to be a varied bunch. Their ethnicities differ markedly--as do their levels of education. Some 85% are women, yet the small percentage of men are healthier and more independent. Some eat bacon and eggs every morning, some avoid meat altogether. Some come from rich families, some from poor. Most centenarians, though, share a tendency to be social, and most have never smoked. Virtually all have a history of low blood pressure, a resistance to Alzheimer's disease and a knack for shedding stress. Many play (or have played) a musical instrument. And they sometimes tend to look, well, sort of different. Often they appear 15 or 20 years younger than they actually are, as if they've somehow found a way to age more slowly than the rest of us.
Which, in fact, may be the case. On one level, Perls thinks that charting his subjects' genetic makeup can yield insights into why they resist disease or age differently. Yet he also believes that his study can have an immediate payoff for those of us with what he terms "normal genes." For the most part, Perls hopes that by being more health-conscious, boomers will come to resemble his centenarian subjects, living most of their retirement years in robust health and suffering only a limited period of illness at the finale. This is what's known as a compression of morbidity, a fate held in awe by anyone desiring a long, healthy life with a swift end, as well as by policymakers hoping that a trend in this direction could signal vast savings in national health-care costs. But Perls--himself a boomer--has recently become intrigued by something else as well: the fact that a healthier, longer-lived society inevitably presents big economic challenges. With so many living to their late eighties or beyond, he says, "we could end up in this situation where people are taking much better care of themselves but not understanding the financial consequences of that. People should realize they're not just investing for 10 years after the age of 60. It's potentially 25 to 30 years after the age of 60. And the ramifications of that are huge."
A year ago, this concern prompted Perls and his colleague, Lara Terry, to join up with Zurich Scudder Investments in Boston for a study looking at how centenarians managed to afford their longevity and whether their health might be interrelated with their wealth. The researchers interviewed 44 people age 100 or older--a representative sample deemed "cognitively intact." The study, which was made available to MONEY prior to its publication, also included 144 children of centenarians. As Perls, Terry and the people at Scudder saw it, these 144 knew about the possibilities and potential demands of a long life--they had a firsthand understanding of what America's demographic changes might portend.
Among other things, the researchers wondered whether the children's saving and investing decisions were influenced by their parents' longevity. "Our hypothesis was that [the centenarians] had planned well," explains Terry, "and that turned out to be the case. What was interesting was that they had lived 30 years beyond what they expected to live, and they still had a little extra." Other aspects were revealing too. Though the centenarians had suffered through the Great Depression, a sizable percentage did not shy away from the markets--in fact, even at their advanced ages, a third were still invested in individual stocks. Moreover, while most tended to plan well in retirement matters, few worried actively about their investments--an optimism that seems to color their philosophy on life, not just their financial outlook. Their children, meanwhile, turned out to be more active investors than typical members of their generation. Like their parents, they favored stocks and funds over CDs. And compared with their contemporaries, many will rely less on their Social Security checks in retirement.
When I talk about the results with Jim Thompson, a senior vice president at Scudder, he tells me that he believes Americans generally think about their mortality in religious or spiritual terms rather than financial ones. That's not a criticism, he adds, but unlike the subjects in the health-and-wealth study, investors usually decline to factor longevity into their financial plans. So I ask him: What would he say nowadays to a 40- or 50-year-old who walks into his office and asks his advice about how much to set aside for retirement? "The first thing I'd suggest is to confront the numbers," he says. "Go to the IRS tables or www.livingto100.com and see what [your life expectancy] looks like."
This seems like a thoughtful suggestion, and later in the week, I take him up on it. After logging on to Livingto100.com and plugging in my data, I wait for the Web page, which is authored by Tom Perls, to spit back an answer. It's a long few seconds, and then--92.3 years. Well! Great news--or then again, maybe just good news. I run a quick check of my 401(k) balance at Fidelity.com and realize that if this works out to be true--and how can I, how can anyone, possibly guess?--my early retirement is looking like a moon shot.
THE METHUSELAH CLIENTS
Clearly, it's easy to get daunted when you calculate long life into your finances. It can also get a little bit complicated. After all, what do a few extra years mean in terms of money? What do five extra years mean? Ronald Lee, the director of the Center for the Demography and Economics of Aging at the University of California at Berkeley, explains that as a rule of thumb, paying for one more year of life--in effect, one extra year of retirement--means spending 1% fewer dollars at every age. In other words, he says, to afford a one-year increase in life expectancy "you could consume 1% less every year, or retire 1% later." That's not such a huge adjustment, he points out. "But if you think of a 10-year increase in your life, then you'd need [to spend] 10% less, or retire 10% later."
Still hard to grasp? Consider this: Financial planners deal with this sort of dilemma every day, with real numbers and real people. "Whenever we say to a client, 'Okay, we should [plan] to age 95 or 98,' they get this look in their eyes, like 'I'm not going to live that long,'" explains Lewis Altfest, a New York City-based financial planner. "I say, 'The chances are that you're correct, but what if you're not? Then you're going to be in real trouble.'" As Altfest and several other financial experts point out, going back to work at 85 because you've run out of money isn't the best option.
Not long ago, a California financial planner named Bill Bengen worked out a set of scenarios for what he calls the Methuselah Client, named for the biblical figure credited with living 969 years. Bengen was interested in seeing what could happen to a portfolio over the course of a lengthy retirement. As he figured it, a retiree who wanted to be sure that a $1 million nest egg would last through a 50-year retirement would be limited to using 3.7% annually. In other words, that person could afford to take only $37,000 per year--adjusted over time only for inflation--so as not to drain the account too soon. "A lot of people see that and say that's not much," says Bengen. "But when you don't have any earning capacity, you have to be careful. If you want to have a [better] lifestyle, you either have to retire later or get into retirement with a larger portfolio. Or else assume that you'll get Warren Buffett-like returns. And remember: Most people can't even be assured of getting the S&P 500 index returns."
Still, Bengen suggests that longevity doesn't necessarily mean an epic stretch of thrift. When he applied historical rates of return to a $100,000 portfolio over the course of a 75-year retirement, for instance, he was staggered by the investment gains. Compounding, he discovered, drove the value of some hypothetical accounts to $100 million and $200 million.
It sure makes you think. A 75-year retirement seems like a fantastically improbable scenario. But not long ago I spent some time with Ruth Busch, a 101-year-old woman who talked about her life one cold, crystalline morning in the sunlit lobby of her Bronx assisted-living facility. Busch, it turns out, needs no assistance except a cane; she just likes the building facilities and the company of her neighbors. A former New York City schoolteacher who taught for 35 years and has visited all 50 states, Busch says she's had the good fortune to live as she likes on a steady pension, Social Security, an annuity and a small portfolio of dividend-paying stocks that she inherited from her husband.
"When did I retire?" she says, laughing. "Oh, a million years ago--1957, I think it was." I ask if the years since have met her expectations. "I didn't have any expectations," she says, instantly. "I knew that in retirement I would travel. I knew that I was going to take life easy. I would say it turned out well. I'm a very happy woman, and I thank the Good Lord for that."
As for the possibilities of compounding, that brings to mind someone like Max Grill, a 100-year-old New Yorker whom I visited in his uptown apartment. Grill tells me he grew up in a tenement on the Lower East Side of Manhattan--he and his sisters read by gaslight--and earned his C.P.A. credentials way back in 1925. Immediately after, he began a long, successful career as an accountant. He sold his practice to a larger firm in the 1970s, but he continues to read the Wall Street Journal every morning and diligently visits the office once or twice a week. "I always wanted to remain active," he says. "I'm not as sharp as I used to be. But I still talk to clients."
Like many centenarians, Grill has no explanation for why he's lived this long, but he has no such hesitation about financial matters. Quite simply, he says, he bought quality stocks such as Coca-Cola and General Electric, and never traded. Ever. Last year, he created a charitable remainder trust and gave the bulk of his fortune in stocks, which had appreciated to nearly $7 million, to Yeshiva University and its affiliate, the Rabbi Isaac Elchanan Theological Seminary. "I lived a pretty good life," he says quietly, reflectively, touching the tips of his smooth, tapered fingers together. "I grew up poor, and I did all right."
Finally, there's the sassy advice of Helen Reichert. "I smoke, I don't keep sensible hours, I don't eat good food, I'm not fond of vegetables, I've never taken a vitamin in my life, and I have no idea why I'm going to turn 100 in a few months," she tells me between drags on a cigarette. She has lived in her Manhattan apartment since 1942, she explains, the year "when Park Avenue stopped being a dump." These days, Reichert says, she lives comfortably on her pension (she was a professor at New York University for many years), Social Security and investments. Among other things, she and her late husband, a cardiologist, bought pharmaceutical stocks like Merck and Schering many years ago and never sold. A deep believer in spending time with friends, traveling and saving, she still dabbles in the market ("I just bought AIG!" she says). I ask why. "I never planned to live as long as I have," she tells me confidingly. "But the pleasure that I am financially secure is absolutely vital to my happiness."
THE VIEW FROM 1899
It would be reassuring to hear that whether you can afford to live to 100 like Max Grill or Ruth Busch depends only on how well you plan or how wisely you invest. Unfortunately, the other part of the equation--the more complicated part, in fact--is whether the U.S. government can continue to help you. It's a familiar concern. In recent years, commentators such as former Commerce Secretary Pete Peterson have insisted that the graying of America will put a massive strain on Social Security and Medicare and that fewer workers will ultimately support more and more pensioners. These entitlement programs will either go broke, pundits warn, or the tax burden on young employees will increase considerably. Or perhaps both. All this may sound like a remote public policy dispute, but it has clear implications for our personal finances. What makes the long-term health of Medicare and Social Security so crucial is the fact that a large percentage of boomers (by most estimates, about half) may not be saving enough on their own. Over 3 million of America's elderly already live below the poverty level; millions of others barely squeak by. The probability that more and more may join them in the coming years turns on its head the conventional idea of retirement as the good life.
Robert Butler says that Peterson, whom he genially calls Chicken Little, assumes the sky is falling. Butler does not. He thinks that we'll eventually mend our government programs; until then, he believes, Americans can make a lot of progress by changing our presumptions about growing old. Butler is the current director of the International Longevity Center in New York City, a research and policy organization on aging, and he ranks among the foremost experts on how the age boom is changing America. As an accomplished physician--and at 74, a senior citizen himself--he understands the medical needs of an elderly population and has argued strenuously for more geriatric training in America's medical schools; as a veteran of the policy wars, he also knows that some of his ideas are politically and socially unpalatable. At least for the moment.
"We may have to do a lot of things we can hardly imagine," he tells me with a grin when we meet in his Manhattan office. We may have to retire later, he suggests, and enter the work force later so as not to overwhelm the employment rolls. We may have to provide long-term-care insurance to all Americans who cannot afford it. We may have to lower the age for Medicare so that employers will not be burdened by the high insurance premiums of older workers and older employees can leave their jobs to train for different careers without fear of losing their coverage. As Butler sees it, it's only a matter of time until our sensibilities change. "We could have had this discussion in the 1890s," he says intently, "and we would have said, 'Gosh, we're actually going to have people living into their fifties and sixties?' Think back to 1899. There were no computers, no minimum wage, no OSHA, no pensions. So a lot has happened for a hundred years."
Of course, the most fundamental change concerns retirement itself, which didn't exist in the world of the late 1800s that Butler conjures up. As economist and retirement historian Dora Costa of the Massachusetts Institute of Technology explains, at the turn of the 20th century, a lucky man might expect three to five years of life after work--"and when he did retire," says Costa, "there would be a very good chance he'd have to move in with his children because he couldn't afford to live on his own. He'd be less healthy, and he'd enjoy it much less." Retirement communities began to spring up in the 1950s, yet even then a pensioner living on Social Security benefits was something of a pioneer with relatively modest ambitions. Only recently, says Costa, have Americans come to expect to spend a third of their years in an active retirement, a development that has enriched our lives immeasurably but has also put us in potentially trying financial straits.
Which is not to say that our demography need be our undoing. As we already know, recent technological leaps and the advent of the Internet have altered our traditional view of the stock market--and of the American economy in general. But Costa wonders if still more dramatic changes are on the way. "I think if we do want to talk about a New Economy," she explains, "then we have to talk about the changing health and longevity of the population."
As Costa sees it, this country isn't yet ready to deal with--or to profit from--the challenges posed by an aging population. Nevertheless, she adds, "I'm an optimist about this. Yes, it does raise a lot of financial issues. But we will be able to work our way through this; we have to work our way through this. Other generations had issues of an aging population too. They found a way."
HOW OLD CAN YOU GO?
It's important to remember that this prospect of a Newer Economy resulting from the age wave--be it good, bad or merely strange--isn't dependent on any new miracles of science. Thanks to the boomers, and thanks to higher life expectancy rates, it's pretty much a sure thing. Right now, we're reaping the rewards of the modern age--of vaccinations, safe milk and pure water, public health advances and more recent developments in drug research and cardiovascular care. In less than a century, the average life expectancy of an American has risen by about 28 years. We're accustomed to thinking of bridges or cities as the great achievements of civilization; many demographers and scientists, however, see awesome human progress in a number like that 28, or in people like Max Grill and Ruth Busch and Helen Reichert. In the year 2001 they are statistical outliers but 50 or 100 years hence, centenarians should be a common enough phenomenon. Indeed, in 1997 the respected demographer James Vaupel declared nearly as much. From that year on, Vaupel predicted, one of every two girls born in the world's most developed countries would live to 100.
The next question, perhaps, is whether living to 150 or 200 is just around the corner, as a few genetic researchers have predicted. It makes for some tantalizing possibilities, not the least of which are financial, but there's little doubt that these optimists are a fringe minority. According to Leonard Hayflick, a molecular biologist whose discoveries have helped lay the groundwork for modern aging research, we haven't yet changed the process of aging; we've merely realized more of our potential. In hundreds of thousands of years of history, the human life span, a flesh and blood limit that no person can surpass (as opposed to human life expectancy, which reflects the average number of years a person can be expected to live) remains at about 125 years. Predictions that go far beyond that mark, says Hayflick, are "sheer lunacy." Moreover, Hayflick maintains that even if medical science could somehow resolve the leading causes of death, such as cancer, heart disease and stroke, it would add only about 15 years to current life expectancy rates.
In any event, the prospect of a life that goes well past 100 raises formidable questions about what kind of life that would be. Would anyone want to live that long if it meant being poor or chronically frail? Or if it meant being citizens of a bankrupt nation? S. Jay Olshansky thinks about the scenarios for super-longevity fairly often--mainly because he's spent a lot of time discrediting them. Olshansky, a well-known demographer affiliated with both the University of Chicago and University of Illinois, agrees that we're on the cusp of a dramatic increase in the elderly population. But he finds Vaupel's prediction for a 50% rate of female centenarianism highly dubious. What's more, when it comes to some recently ballyhooed antiaging medications, Olshansky--whose new book, The Quest for Immortality, traces humankind's timeless, fruitless struggle to find a fountain of youth--sees the old longevity-in-a-bottle elixirs that charlatans have been hyping for thousands of years. For Olshansky, like Tom Perls and Robert Butler, it's not the quantity of life that's ultimately most important. It's the quality of life, and the struggle to improve our health throughout the many years we now live.
Still, when it comes to speculating about longevity, Olshansky can't resist a bet. Not long ago, he read an article in Scientific American that included a comment from a friend of his, University of Idaho zoologist Steve Austad; afterward Olshansky called Austad to make a wager. By 2150, Austad thinks, someone who's alive today will make it to age 150. Olshansky thinks someone might live to 130. So for now, they've put $150 each into a kitty. By the time the bet comes due in 150 years, the two scientists hope the money in the trust, which goes to the winner's heirs (or if there are no heirs, to the winner's choice of universities) will appreciate to half a billion dollars. "The problem now," says Olshansky, "is figuring out which mutual fund and financial institution will be around then."
It also turns out that Olshansky was so taken by the long- term growth prospects of the bet with Austad that he has decided to set up a second trust solely for his distant descendants. Like the bet fund, this trust will start with $300 and be payable in 2150. "I figure it's at least five generations removed," he says with a laugh. "I don't know how many [heirs] there will be, and I don't know how much a half billion dollars will be worth then." After a pause, he adds: "You know, over five generations, the number of descendants can add up pretty quickly. So it might only be enough for them to get a cup of coffee. We'll see."
Actually, we won't. But someone will. And who's to say--maybe that money will come in handy for retirement.