Get Income for Life
By Dan Caplinger (TMF Galagan)
October 24, 2006
For those who always say that media outlets never publish good news, here's something to consider: People are living longer. According to a report from the National Center for Health Statistics, the average life expectancy has risen by about five years since 1975. Although the bulk of this gain is a result of reductions in infant mortality, which tends to have the greatest impact on most life expectancy averages, data on life expectancy for 65-year-olds still shows an increase of more than two years over that time period. Seniors turning 65 can expect to live between 18 and 19 more years on average.
It's hard to say that living longer is anything but good news for everyone. However, life expectancy only measures quantity of life; it doesn't say anything about quality. Longer life gives people more time to enjoy life's experiences and spend time with loved ones, but that extra time also brings extra expenses that people must take into account. The challenges faced by today's seniors are challenging the framework of the life cycle traditionally followed by most Americans.
Earning and spending
In terms of economics, one can split a person's life into three stages. For the most part, children and adolescents do not work or otherwise earn income; their expenses are borne by their parents or caretakers. This first stage extends into young adulthood for many people who choose to obtain advanced degrees and other additional education.
Adults, on the other hand, start doing things that allow them to earn money to meet their own living expenses. In this second stage, many adults are fortunate enough to make more money than is necessary for their immediate needs; this surplus money can either be used to repay student loans and other debt from the first stage, or be set aside for future needs.
At some point, most adults choose to stop working and retire, entering the third stage of their economic lives. During this time, retirees are entirely dependent on the resources they have set aside from earlier in their lives, whether those resources come in the form of their own savings or through regular income like pension and Social Security payments.
Increasing life expectancies have lengthened the time many Americans spend in the third stage, which in turn creates the need for adults to save more during their working years. The only alternatives are becoming dependent on family members for support or choosing to work later in life than one would prefer
reply or leave comment
|
|
|
|
