Wednesday, April 15, 2009
Myths about retirement and marital status
Kimberly Palmer has an important article today (April 15) in Yahoo! Finance, that credits US News, although I could not find the article there yet. The title is “7 Myths About Marriage and Retirement.”
The biggest myth is that single people need less money. That’s a myth because single people tend to accumulate less wealth and spend more of it sooner. Capability for stable marriage can be an economic asset, like it or not (go back to George Gilder in the 1980s). After age 65, single people’s income dwindles by 3% a year until it is down to 20% by age 95.
But she says that retirees don’t need to plan to maintain their wealth until age 100. People should be sensible about their actuarial probabilities – but lifespans may be very rapidly increasing now (compared to vigor and well being) because of the way medicine is being practiced and financed (Medicare) relative to lifestyle habits. She warns that people at age 65 tend to underestimate their life expectancies, and then overestimate it at some point after age 75.
She also thinks that people draw on pensions too quickly and don’t provide enough for surviving spouses (she prefers full survivorship rather than years certain).