Hartford panel discusses the future of longevity

Nov 27, 2006 @ 12:01 am

By Gary S. Mogel

NEW YORK - Living longer is a blessing - but only for as long as the money holds out.

That was the key warning from participants in "The Future of Longevity" panel discussion this month in Cambridge, Mass., sponsored by The Hartford (Conn.) Financial Services Group Inc.

When it comes to predicting their own life spans, most people are way too pessimistic, according to Maureen Mohyde, director of the insurer's corporate gerontology group. "Two-thirds of people underestimate how long they will live," she said.

Women who didn't adhere to "the Cher school of husband picking" and who chose mates older than themselves are especially susceptible to longevity-related financial catastrophe, Ms. Mohyde noted.

Longevity mismatches

Many romantic matches turn out to be longevity mismatches, because women often outlive their husbands by 15 to 20 years, and the husband's death cuts income by 50% and reduces expenses by just 20%, she said. Ms. Mohyde added that a wife who dies first isn't as financially devastating to the husband, though she didn't offer statistics.

"Aging is a female sport," said Joseph Coughlin, founding director of the Massachusetts Institute of Technology's AgeLab in Cambridge. But that means that the caregiving of husbands and other relatives often falls on women's shoulders, he added.

All people become asset managers when they retire, said John Diehl, a Hartford vice president. They become the chief executives of the business of economic survival and must maximize the value of that business, he added.

One way of doing that is to purchase "income streams" by using "longevity insurance" products such as annuities, said Mr. Diehl, a certified financial planner.

People need help in balancing the "hope and fear" of retirement, said Ben Stein, an author, actor, former attorney and economic theorist from Beverly Hills, Calif. Rising prices create much of that fear, he noted.

"Retirees' income has to compound and grow so that it keeps up with inflation," Mr. Stein said.

Another fear is of needing costly long-term care.

Financial advisers in the audience recounted horror stories of fortunes lost by retirees who refused to buy LTC insurance. The problem was doubly acute when both husband and wife wound up needing nursing homes for the rest of their lives.

One adviser suggested that the panelists might be a little out of touch in assuming that retirees want to "sit on the front porch with a mint julep in their hands." Many will want to pursue other careers and activities, he pointed out.

'Third rail' of marriage

Despite the importance of financial planning for retirement, few couples are keen on discussing the topic. Talking about retirement finances is the "third rail" of marriage, Mr. Coughlin said, as it is electrically charged and no one wants to touch it.

"It's always an uncomfortable conversation," even when moderated by an adviser, Ms. Mohyde noted.

But advisers, she warned, better bring up the subject - and make eye contact with the wife.

"About 70% of women take their business to another financial adviser within three years of their husband's death" because the adviser probably was chosen by the husband and spoke mainly to the husband, Ms. Mohyde said.

Another mistake that many advisers make is telling clients that "the money just isn't there" to fund a certain goal.

If they want a second home in Miami Beach, Fla., don't tell them that they can't afford it, Mr. Stein said. Tell them instead that they can have a second home - but in Panama City, Fla., he suggested.

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