I have a friend who will turn 104 in four months. She struggles with osteoporosis, which recently has kept her from doing her daily stationary bike ride, but otherwise, she's healthy and still sharp.
She lives in a Washington, D.C., condominium and has some household help, including a nurse who comes in three days a week to check on her.
Like all of us, she has some financial limitations -- her lifestyle is expensive. But because her husband left her with substantial income, she's been able to continue to pay her bills and live comfortably.
Her 65-year-old daughter has a different set of problems. Like her mother, she's healthy and she continues to work at a job that is occasionally physically demanding. She's accumulated two small defined benefit, old-fashioned pensions, and she has a cash balance plan from her current employer. Over the last 10 years, she's been diligent about building a substantial 401(k). She expects to collect half of her ex-husband's Social Security when she reaches full retirement age -- 66 -- and her own full worker's benefit at 70. Her financial planner says that as long as she lives modestly, her money is likely to last until she is 95.
For most of us, that's probably long enough, but if your mother is nearly 104 and shows no signs of imminent demise, 95 could easily be 10 years too few.
What does somebody like this woman do next?
She could take a risk that she just won't live that long, but given her circumstances, that may be a bad bet. Instead, she plans to work until she is 70, banking the $1,300 a month that she expects to collect from Social Security between age 66 and then. She also has enrolled in the university to complete her doctorate, so she will be a fully qualified college professor, able to teach part time, after she leaves her current job.
Recently, she bought a longevity annuity with $100,000 of her savings that will begin paying about $1,600 monthly for the rest of her life once she reaches age 85 and inflation has reduced the value of her other fixed sources of income.
I've been watching my friend struggle with these retirement planning issues, and I think she's making wise choices. The most difficult challenge for her is accepting the idea that she'll have to spend cautiously for the rest of her life. If money were no object, she'd immediately quit work and book a round-the-world cruise. But the reality of her family history of longevity keeps her grounded and on the job. Sometimes, she resents it.
I wonder how many of the rest of us will be sorry we didn't follow her self-discipline.