OK, so it’s not really a “secret” that being healthy and having money are essentials to a comfortable retirement.  Pretty obvious actually.

But how prepared are you for the possibility that you just might be a healthy centenarian some day?

What if you live “too long”?

In addition to reading Robert Powell’s MarketWatch column “Planning for retirement?  Plan to live to 100,” you may wish to consider these statistics from the Journal of Population Research:

• Life expectancy in classical Greece and Rome was 35 years
• Life expectancy in the Victorian Era was 40 years
• Life expectancy in the 1900s was 73 years
• Life expectancy today is about 84 years

Thanks to improved sanitation, better living conditions, advances in science, not engaging in the carnage of neighboring villages, T-Rex extinction, etc., our life expectancies have improved dramatically over time.  Particularly in the past century.

To the north of us in Canada, the Atkinson Fellowship in Public Policy published an interesting and fairly extensive Special Report in 2007 entitled “Ontario braces for a grey wave” that is worth a read for anyone who wants a glimpse of what the future may hold as they age.

Boomers’ Biggest Retirement Fears

Last year, US News Money reported the findings of an AARP survey that asked 50-somethings to identify their biggest fears.  Not surprisingly, the top two fears of baby boomers were:

1. Health care; and,
2. Running out of money

Since we’re not experts in offering advice on how to improve your overall physical health, we’ll stick to something we do know a thing or two about:  Improving your financial health.

“Pensionize”

If forced to boil a sensible retirement strategy down to its simplest, easiest to implement solution, we would advise anyone who wants to protect themselves against the possibility of living too long to remember one word:

“Pensionizing” refers to converting a single lump sum via product allocation into a series of future tax-advantaged cash flows one can never outlive.  People, it turns out, like the idea of guaranteed lifetime income as evidenced by the high satisfaction levels of those currently receiving Social Security benefits and traditional pension payments.

And the longer you live, the better the value of your “pensionization” choice and the higher your retirement satisfaction.

Plus, “pensionizing” is a concept that is easy to understand and simple to implement.

The trademarked phrase originated from an excellent book Pensionize Your Nest Egg which analyzes the challenges faced by Canadian retirees and offers some solutions to the population there.  We highly recommend this book and hope the authors some day will write a version applicable to the United States.

In our practice, the categories of clients we most frequently help with “pensionizing”are:

1. Structured Settlements:  Those in the process of settling personal injury claims;
2. Structured Attorney Fees:  Attorneys representing clients who are settling personal injury claims; and,
3. Retirement Fund Roll-Overs:  Clients seeking to convert portions of their eligible 401(k) and IRA balances.

With the checks and balances built into the insurance regulatory system today, the safety and security of guaranteed lifetime income from a highly rated life insurer is difficult to replicate.

Even financial professionals who profess to loathe annuities, will admit that a portion of one’s retirement funds should be allocated to annuities as a hedge against a long life.

The National Structured Settlements Trade Association recently blogged about how nicely structured settlements can complement one’s retirement planning.

So whether you are being offered a structured settlement as an option for a personal injury claim, are an attorney looking to sensibly plan for your future or a current or “soon-to-retire” baby boomer tired of the ups and downs of the stock market, call us to let us help you make an informed decision about your future.