Planning for Longevity – Keisha Blair Featured in the New York Times

Evaluating your financial plan to take into account a longer lifespan isn’t something to tackle alone, says Greg Knight, CFP, founder of Engage Advising in Oakland, Calif. “There isn’t just one thing that needs to be done, but rather each person should do a careful assessment of their overall health, financial status, likely long-term care needs and family longevity.” For that, it helps to have a professional. Here are three things to consider when choosing an financial professional.

• Credentials Anyone can dub themselves a “financial planner,” but the Certified Financial Planner (CFP) credential indicates that an expert is licensed and regulated—and offers actual planning in addition to investment advice.
• Payment Inquire how the financial professional is compensated. Some charge a flat fee, an hourly rate, a percentage of your assets, are paid on commission or a combination of these. By knowing the fee structure and the costs, you’ll know what you’re paying for.
• Comfort level Do you prefer a more formal relationship with your advisor, or one that’s more relaxed? Do you want someone who is more hands-on, or not? “Trust your gut,” advises Murphy Casserly. “You want someone who makes you feel grounded and comfortable.”

It’s never too early to start an advisory relationship that can sustain you for years. Keisha Blair, a co-founder of Aspire Canada, a mentorship organization in Ottawa, Canada, learned this firsthand when her husband died suddenly when she was only 31. “He was 34 and fit as a fiddle,” she says. “We never saw it coming.”

By sheer chance, several months before his death, Blair and her husband had consulted with their financial professional, who urged them to buy life insurance policies, given that they had a toddler and another baby on the way. That prescient moment gave Blair, who recently founded The Modern Widow site, financial security for herself and her two young sons—and a new take on the future. “While you don’t know how much time you have, you still have to think about how long your life might be, as well as what the next generation needs.”

Blair, who just turned 40 , still relies on the guidance of her financial professional to help her think through how her choices now can have an impact on her life down the line—most recently, her asset allocation. “I was invested pretty conservatively,” she says. “But my money was barely keeping up with inflation.” After reviewing her portfolio with her advisor, and weighing her own longevity (women on average live about five years longer than men), Blair decided to increase her equity allocation to allow for more growth potential.

“Financial planning isn’t a static process,” Murphy Casserly notes. “You need someone who can work with you, as your life changes.”

Everyone can benefit from a financial plan, and the first step is saving early and steadily. Savvy planners are likely contributing to an employer savings plan and IRAs. Murphy Casserly recommends factoring in other sources of retirement income such as Social Security, a pension or trust, non-traditional retirement assets, as well as your spouse’s or partner’s accounts.

Then, talk to your financial professional to help stress-test your savings (i.e. if you live to 80, 85, 95 or longer). “These days, if you earn a six-figure income and expect a similar lifestyle in retirement, saving the maximum may not be enough,” Murphy Casserly cautions. If you’re over 50, take advantage of so-called catch-up provisions that allow you to save an extra $6,000 per year in most tax-deferred employer-based accounts in most tax-deferred employer-based accounts [e.g. a 401(k) or 401(b)]. You can also save an extra $1,000 per year in an IRA or Roth, on top of existing contribution caps.

Also, talk to your advisor about a lower and/or more flexible withdrawal strategy in retirement, as that can help extend your income. “Explore the possibility of postponing retirement, or working part-time,” Knight adds. Working a few years longer can boost your savings, increase your Social Security benefit and reduce the number of years you’ll be drawing down your nest egg.