Incorporate Your True Age in Your Retirement Income Plan
For more than a century, the idea of retirement has been linked to a “retirement age.”
Many people consider 65 to be the retirement age in Canada – the point at which you qualify for full Canada Pension Plan or Quebec Pension Plan benefits, for example, and when you can start your Old Age Security benefit.
Increasingly, however, retirement planning is beginning to recognize that people really have two different ages: a chronological age, or the number of years you’ve been alive; and a biological age, which takes into account how old your body seems, based on many different factors such as genetics and how your chromosomes have changed over time.
This idea has already received a lot of attention in fields like biology, gerontology, actuarial science and from retirement income planning specialists including Dr. Moshe Milevsky – finance professor, thought leader, and author of more than a dozen retirement income planning books.
At IPC, our Advisors take the time to learn more from experts like Dr. Milevsky about concepts that can help enhance your retirement planning, such as the difference between biological and chronological age. Here are some big-picture insights into how a few select IPC Advisors are incorporating the difference between biological and chronological age into their retirement income planning with clients.
Insight #1: Your biological age can differ from your chronological age by up to 20 years
While chronological age is simply a measure of how many years you’ve been alive, our biological age can be impacted by as many as 60 or 70 additional considerations. These range from the length of our telomeres (the protective caps on the ends of the strands of DNA called chromosomes), to health and lifestyle aspects such as our blood pressure and activity level, and even to the amount of wealth we’ve saved for retirement. When all of these factors are taken into account, a person’s biological age might differ from their chronological age by as much as two decades. That could mean someone planning to retire at a chronological age of 65 might only have a biological age of 55 – or even less.
Insight #2: Your retirement income plan should incorporate your biological, not just your chronological age
Someone whose biological age is younger than their chronological age should plan for more years of retirement than if their biological and chronological ages were similar. That’s because they’re really younger, on a biological basis, than their birth certificate suggests.
How Flexible Advice Can Make a Difference
Renee Rebelo, Wealth Advisor with Life Coach Financial has long been integrating the concept of “biological age” into the retirement income plans she creates for her clients. She starts by asking her clients how they picture their “first day” of retirement: “What does a ‘day in the life of retired you’ look like?” Then, if a client describes being active and busy, she knows their biological age may be younger than their chronological age. In contrast, a client who describes health concerns and a less-active lifestyle may have a biological age that’s close to or even older than their chronological age, and she knows to adjust their plan to incorporate what they’ve told her about their health. When she’s collected information about the client’s vision for their retirement, Renee says the next step is “all about matching the client’s lifestyle and health status with their finances to create a sustainable retirement income plan.”
Renee says that incorporating this kind of biological-versus-chronological-age thinking into retirement income plans is most important in the years before retirement, when the gap may be the largest. As we age, she explains, our biological and chronological ages can get “caught up,” meaning they’re closer than before retirement. “By asking these questions early, before the decision about retirement is made, we can develop a plan that is synchronized to your personal needs, goals, and concerns – and the concept of biological age can be woven directly into your plan.” Keep in mind, says Renee, that retirement income planning is a dynamic process that you can continue to adjust for as long as you’re alive. “If your health status changes, we can — and should — revisit your plan to make any necessary revisions,” she notes. For Renee, creating a flexible plan that can be monitored and fine-turned throughout a client’s retirement, not just at the outset, is how professional financial advisors can add the most value.
Renee’s Perspective: “Designing retirement income plans that are personalized and based on insights such as the difference between biological and chronological ages is crucial if I am to bring more certainty to the financial planning process for my clients. By incorporating a client’s biological age and ensuring the plan is flexible enough to account for any sudden changes in health, my clients can enjoy their retirement knowing the bases are covered if they need to face the unexpected. A secure, stress-free retirement is what I aim to deliver to all my clients.”
Get Confident About Your Retirement Income Plan
What does this mean for you as someone planning their retirement? Understanding the difference between biological and chronological age can help underscore the importance of a having a formalized retirement income plan created just for you. We believe investors should have the confidence that their retirement strategy and investments can continue to grow while withstanding market volatility, and that they can generate sustainable income throughout retirement, even if their circumstances, including their health status, change.
If you have concerns about your retirement income plan and making your money last, let's talk.
