Thought of the week – Regrets, I’ve had a few

Frank Sinatra may have had only a few regrets, as he claims in his song My Way, but the older ones among us seem to have more than just a few... 

Joachim Thought Of The Week

People notoriously save too little for retirement, creating a major risk of old age poverty. This risk of having inadequate income only grows with every generation. But while we know about the regrets older people have for not having saved enough, there are other crucial retirement decisions that many people regret afterwards.

The always great Olivia Mitchell teamed up with Abigail Hurwitz to add a couple of questions to the annual US Health and Retirement Survey. These questions were designed to assess how many people aged 50+ regret important retirement decisions.

More than half (57%) of the 1,764 people surveyed thought they had saved too little for retirement, which made that issue the number one concern for retirees. But a substantial minority of 40% of retirees regretted not having bought long-term care insurance. Readers outside the US may not know this, but if people need long-term care in the US and must move into a care home, public healthcare insurance (Medicare) will only cover the first 20 days in full and the next 80 days partially. After 100 days, people who need long-term care have to pay for it themselves (I know, the so-called best healthcare system in the world …). Today, it is extremely likely that eventually all of us will need long-term care as we get older and not having insurance for this eventuality can literally bankrupt you.

And then there are about one-third of retirees who have two regrets that I find just as important to consider as the question of buying long-term care cover: The decision to annuitize part of your pension pot and the decision to work longer if you can.

Most people drastically underestimate how long they are likely to live. If you are a 65-year-old man in the US, you can expect to live a further 17 years to the age of 82. If you are a 65-year-old woman, you can expect to live a further 20 years to the age of 85. In the UK, you can expect to live about a year longer than that and in Japan three to five years longer than that.

And half of all people will live even longer than that since these figures are medians.

If you are 65 today and you look at your retirement savings, how sure are you that the money will last a further 20 years? In general, it is a really good idea to take some of the retirement savings and buy an annuity that will pay a regular income no matter how long you live.

And finally, if you can expect to live a further 20 years but fear you haven’t saved enough, why not work longer? Taking a part-time job or a consulting gig to remain active during retirement is increasingly common among retirees. Clearly, not everyone can do that. If you have health issues or work in a physically demanding job, working longer is often not possible. But those who can should consider it. It keeps you active and fit and reduces your need to tap into savings. It’s a win on so many fronts for retirees if they can find a way to keep working after the age of 65.

Thought of the Day features investment-related and economics-related musings that don’t necessarily have anything to do with current markets. They are designed to take a step back and think about the world a little bit differently. Feel free to share these thoughts with your colleagues whenever you find them interesting. If you have colleagues who would like to receive this publication please ask them to send an email to This publication is free for everyone.

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