Happy New Year! We hope that you enjoyed the festive season and time with family. As we begin another year it is worth reflecting on our good fortune that we are living in an era of remarkable advances in health care that have prolonged the average lifetime. In 1875, the average life expectancy in the USA was 40 years old. By 1960 (85 years later) the average life expectancy in the USA was 69.77years and in 2019, it was 78.79 years. Life expectancy has almost doubled since 1875. It has fallen since 2020 due to the increase in mortality rate resulting from COVID and currently stands at 77.28 years in 2022. Men typically on average have a lesser lifespan reaching approximately 74 years of age whereas women on average live to about 80 years. As medicine advances at an exponential rate with the convergence of quantum computing, biotechnology, genomics, regenerative medicine, research and many other related disciplines, the pace at which healthcare is advancing is accelerating and we can expect the average life expectancy to keep rising alongside these advances.
This is, of course good news for human beings but it also means we need to plan for living longer. As we live through the great inflation since the advent of COVID and a challenging bear market, it's important to revisit retirement plans on a regular basis and re-calibrate if needed to realize the retirement you are planning for.
An important factor that will influence your retirement income are social security benefits and the age you start claiming them.It is important to understand the financial implications of when you choose to claim social security. For example, it is estimated that overall benefits, on average, will be approximately 76% higher (inflation adjusted) if you start claiming social secuirity at the age of 70 versus the age of 62. That may be counter-intuitive but when you factor in the early-retirement reduction penalty and conversely the delayed retirement credits (DCR's) that increase your retirement by 8% per annum for each year through the age of 70, this is not the case. Only 7% of all retirees wait to claim social security until the age of 70 despite this.
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