Is Your Financial Plan Healthy?

Most of us have seen the commercials for new prescription drugs that are now a common feature on television. Always, somewhere toward the end, the voice-over announcer says the words, “Ask your doctor…” That makes sense, of course, since any decision to take a drug involves serious health implications. You certainly should ask your doctor before starting any medication.

But there’s another area where sharing health information is important, though often overlooked. In addition to your physician, your financial planner can be of much greater service to you if they know and understand your overall health situation and outlook. Now, I’m not suggesting that your next appointment with your financial adviser should include a lengthy list of symptoms and health characteristics. But I do think it’s important for your adviser to have a good working overview of your health situation, because your health is one of the most important determinants of two things: 1) your expected lifespan; and 2) your medical needs in retirement. Both of these factors have profound implications for your financial and retirement planning.

Unfortunately, most financial planners are reluctant to discuss their clients’ health in much detail. Often they resort to standard life expectancy tables. In some cases, planners are advised to assume that every client will live to age 100. But are such broad-brush assumptions really helpful to individual clients in the long run?

The more detailed information your financial planner has about you—your goals, your resources, your employment, your tolerance for risk, your life priorities, and other factors completely unique to you—the more accurate and personalized the planning process becomes. It just makes sense, then, that discussing your health with your planner can only increase your chances of formulating an overall plan that is most likely to be the best fit for you. If you live a reasonably healthy lifestyle—maintain a reasonable weight, don’t smoke or drink to excess, get regular exercise—it isn’t at all unreasonable to assume that you could live to age 100. In that case, your long-term planning should take that into account. If, on the other hand, you face health challenges—say you’ve been diagnosed with a serious illness, or you have a prominent family history of heart disease or some other ailment—your planning should take that into account, not only in terms of allocating funds for medical needs, but also for calculating your most likely life expectancy in order to maximize the benefits you receive from your assets.

One of the better online life expectancy calculators is at LivingTo100^TM. This free online tool allows you to enter information concerning your lifestyle, diet, weight, family history, and other health factors in order to arrive at your projected longevity. The site then asks you an important question: “Do you have enough money saved to live that long?” It’s a good question, and one that a qualified, professional adviser can help you answer.